Atlas Copco AB (publ) (ATCOA) Earnings Call Transcript & Summary

[Presentation] Great. Welcome to Atlas Copco Capital Markets Day 2024. Welcome to all of you here on site, good to see so many people here in Belgium, and welcome to you participating via the web. Before we move on to today's agenda, some safety instructions. In case of emergency and we need to evacuate, there will be an alarm, a loud alarm, and that means that we need to leave the building. Then please use 1 of the 2 emergency exits on each side of this room. You can also see it here on the blueprint. Now the agenda, it's going to be a rather busy day. And we will start with the group presentation by Vagner and Peter, followed by business area presentation by Andrew Walker, and then a short break, but efficient break. After that, you will listen to Compressor Technique, followed by the Q&A sessions. And for those of you on the web, you will be able to write your written questions via the player. After the Q&A, an even more efficient and quick lunch. Because after the lunch, we want to show you the real stuff. We're going to show you the innovation tour. And we're going to go on buses to our premises here in Antwerp. And I say it already now, 12:45 sharp, the buses will leave. They will leave at 12:45. We have lost investors before. We will not do it today, but we give the responsibility to you. We end the day at 4:30. Some of you, I know, have chosen to leave earlier. I will come on to that, okay. A busy day. And in order to make all this work smoothly and for your convenience, there are some logistics. So please pay attention to the following slide. But before I move on to that, the presentations can already now be downloaded from our website at this URL or on the IR, you go into the IR website. So logistics, make sure you have checked out from this hotel. If you haven't done, so yet, please do it during the break. The buses, again, 12:45 sharp. We take care of your luggage and that will be collected by you at the end of the innovation tour. When we are done with this event today, we will all end at our premises in Antwerp. There are transportations organized based on the details you provided. I know that some of you have a bit of changes already. So -- and we advise you to contact the registration desk during the break. And now there's going to be some details here. So pay attention, please. There will be buses and taxis to Antwerp Train Station -- Central Station. It's going to be to Brussels Train Station. It's going to be some individual addresses you have been informed by us. And all these buses are going to be marked with the special -- with the destinations. And then we have you early leavers, extra important for you is going to leave us at 4:00 or 3:30 that you really stick to your assigned group. You all have a color on your badge. Again, if anything in your departure has changed, please contact the registration desk. And now it's time. And with those words, I hand over to our President and CEO, Vagner Rego. Welcome up on stage.

Thank you, Daniel, and good morning, and welcome to this Capital Markets Day. My name is Vagner Rego. I'm the new CEO of the Atlas Copco Group. A group that has been around for 151 years, as you know, and have been present in my daily life and your daily life as well. Since the moment you decided to leave to this event, you took a taxi, you took an airplane, you came to this hotel, you had some food yesterday. And in all these touch points, we are present, supporting different industries to provide products. If you take, for instance, the transportation industry, like I said, car manufacturing, airplanes, trains, roads and then even space, we are involved in that industry. If you need to transport satellites to space, we are also involved in that industry. Newer industries, semiconductor industry, but also traditional industries, like steel production. So we are involved in our daily life. And we have been transforming ourselves along these 151 years, adding new products, adding new addressable markets. And with that strategy over the 151 years that we are in the market, we managed to deliver our products in 182 countries. So pretty impressive presence and footprint. And to do that, we have 53,000 employees deployed in 71 countries. And that combination allowed us to deliver SEK 153 billion last year in revenues with a solid profitability of 21.5% and also solid return on capital employed. And this group, I really feel honored and proud to be the new CEO. So -- but I think you are here learn a little bit more about the group and we have our agenda. So a very brief highlight on the result of last quarter, a little bit about finance. We will spend a bit of time to discuss, once again, about our decentralized model, what we call a truly decentralized model. We confirm our strategy and fundamentals to grow. And then Peter will come on stage to talk about financials, and we will summarize with the main points. But if I start on Q1 result 2024. I think you all remember Q1 2023, I guess, many of you were in the conference call when we had a fantastic record quarter. As you can see, it was all-time high quarter. All the business areas performed very well. We had a tough comparison, but still Q1 was a solid quarter. We are quite happy with the outcome. If we look to industrial compressors against a very high comparison, we still delivered a flat quarter. Vacuum was likely down now mainly because of industrial vacuum. We also explained during the call, lithium battery in production and solar in China had an influence, but still solid numbers. Slight growing Industrial Technique was also positive, quite happy with that development, mainly from Europe and North America. Power Technique had a very strong comparison base, very strong. So -- but still solid numbers. One thing that I'm very happy about, I've been in -- I spent almost 20 years in service within the group. So I did several jobs, including the President of the service division. I'm so happy, I'm proud to see all the business areas and all the divisions within the business areas of the service divisions are performing very well. They are really capturing the aftermarket potential, and you will see more about it as well, and solid profit and return on capital employed. But then if we zoom out on the long-term perspective, you can see that we have delivered solid figures over the years, fulfilling our commitment of 8% growth over the business cycle. Solid profitability, and then if I stop a little bit here on 2020, which was a tough year for everyone, we still managed to deliver solid figures. Quite solid revenue, almost flat revenue and profit -- also solid profitability. That shows that the focus we have on resilience is really paying off. The focus we have on the service division is also paying off. I think that's also important to highlight. And return on capital employed, it's varying depending on the acquisition we make. Here, you see an acquisition that was quite relevant down, but we managed to work our way back to 30%, also solid figures. Another point that is very important on our strategy. You have seen our revenue evolution over the years. But it's also important to highlight that -- to highlight that we are not so exposed to a single market segment. This diversity in market segment is also a part of our strategy and something that we will continue to work on to be able to be present in some niche markets that will offer growth, but also diversification that allows us to continue to be resilient. Also, a very important point in our strategy. Then going into decentralized model, what we call a truly decentralized model. What is important here in this first slide, I think you all know how we are organized. We have the group -- management group center, 4 business areas. Within the business areas, we have the divisions. I will come later to talk more about the divisions. But here, one thing that is important for us and we will keep an eye on it, to keep the focus and to continue to be organized like that, it's in our group center. We have quite a lean group center, less than 2% of the employees are positioned in the group center. Lately, we did invest a little bit more. Why? You have items like IT and cybersecurity, and you all agree that it's an area that we have to be very careful and make the right investments to protect the company and that we are doing. And it is an area that we will continue to pay attention, but the main focus is to keep a lean headquarters and move most of the operational teams to the divisions and business areas. But then we'd like to talk about ourselves, but everything starts with our customers. They are the reasons we are here. They are the ones that create sometimes even the way we are organized because I want to talk about decentralization, but the way we couple divisions and business areas has also to do with our customers, how to serve customers in a better way. So we're starting with our customers. Then we have -- we group our products and solutions to serve our customers in the best possible way. But then I would like to use my former business area that I was responsible for until 2 weeks ago to explain a little bit more about the decentralized way of Atlas Copco. So we have the business areas. Within the business areas, we have the divisions. So within Compressor Technique, we have 7 divisions. Every division is grouped in a different -- in a way that makes sense for the end users. If I use Industrial Air, Industrial Air is covering equipment up to 90 kilowatts. What is the responsibility of Industrial Air? They have a person assigned, a divisional president with a full P&L responsibility and a management team around him. What is his mission? He has to develop the products, the best-in-class products. They need decide where to produce, when, how? Then after production, you need to sell the product. And they are the ones deciding how this product should be sold. In Compressor Technique, below 90 kilowatts are smaller compressors. What type of customers do we have? Is it bigger organizations or not? No, most of times, we are talking about smaller and medium-sized organization. How to serve those customers in a way that we deliver customer satisfaction, but also, we increase our presence in the market. And then you have one man, together with his management team, decide on that. And that gives us what we call focus. We are focused in our product. And sometimes, we also have focus in a market segment. If you take medical gas solution. Like the name says, is to cover the medical gas. One thing is to serve an industry. Another thing is to sell to a hospital. Different regulations we need to follow, different mindset, different ways to work and interact different stakeholders in a hospital that you have to talk with. So -- and then we cluster in that way. And within the group, we have several examples like that. And sometimes, we also, in the past, we haven't talked too much about that, but I think it's important. We have the focus with the divisions. But sometimes, even the divisions need a little bit more granularity to understand their business worldwide. We also do -- we divide further those divisions and subgroups what we call business line. And that is also a global P&L that allow us to really zoom in and say, oh, we have a problem here, we have a problem there. And we create more accountability in the organization on how to run, how to manage, how to focus on the right direction. But how we deploy all that in the field. We have people in 71 countries. Then we have different types of entities. So first of all, we have product companies. What is the mission of a product company to design the best product at the lowest possible price, cost, let's say. So design the product at the lowest possible cost. Then we have distribution centers that will take the product, we restore or not, depending on the market segment, and we'll distribute those products, again, at the lowest possible cost. Then we have customer centers. What do they do? They are responsible to sell the best-in-class products to create value for our customers, and value for our customers should also create value for the company. And the combination of people responsible to create, produce the product, lowest possible cost, selling, value selling to our customers, will create operational margins that we have. Another point that creates as well accountability because those companies, they have a general manager. And in Atlas Copco, a general manager, he is responsible for the full P&L and balance sheet of that company. So he has ownership, again, accountability. But then we have another element that is important in our strategy that I would like to highlight. If you see the layers, we have a business area. The business area is very lean. It used to be myself, my controller, HR, a little bit of HR support, few functions, not too many. It's very lean. A lot of things are happening here in the division because they have -- they are the highest operational reporting level. And if the President of Industrial decide, oh, we need to ramp up production, or we need to scale down. It's the President with a product company manager talking and deciding. That means we don't have too many layers, and that brings as well speed on the action plans, not too many internal negotiation. And I think that is a good summary of how we are organized to bring focus on market segment, to give the best chance of our products or solutions in a certain market segment. We have accountability because, which lies the business in a quite detailed level, and we give ownership to our people about you are responsible about this P&L. And then also speed because we don't have too many layers, not too many internal negotiations. And how is that? We have, in total, 4 business areas, like you said -- like I said. Within the 4 business areas, 23 divisions. And then we have also 600 entities, spread among product company, customer centers and distribution center. There are some other legal entities, but that's not relevant for our discussions. We have 360 customer center entities all over the world. And because you have different products, sometimes different brands with ownership, with accountability, with people responsible for that P&L. And it's spread all over the world, giving a good revenue distribution that we have. That is more or less 1/3, 1/3 and a little bit more in Asia. But that's not the only thing that we need to be successful. We have a good organizational structure. We have the 600 entities that we need to follow-up the P&L in a decentralized way. It's not Peter Kinnart that every month goes to 600 P&Ls. So he sees the aggregated value. Our people in the field is doing that. So within those 600 P&Ls, more than 4,000 business lines distributed and followed up. But that's not enough. We need also to have a certain culture; the organization needs to agree as well in the way we are organized. And to talk and spread about our culture, we have this Atlas Copco book that is a fantastic tool. And I still remember when I was hired as a young engineer in Brazil, and the same book was opened to me and the general manager. That time, the business line manager discussed page by page, and I was so amazed with the rationale behind those pages that you start to understand how to take decisions. And I'm now almost 20 years old, 10, 20 years in the group, and I'm still talk about the book, and I still use the book to take decisions. And I still refer to the page to explain the rationale of my decisions. And I think that's something that you should not underestimate, how important it is for the group. How do we talk and spread our culture. And I have been just appointed and before I took over as CEO, I was visiting some new companies. And it was so nice to see that they start to talk about the book. Now I understand we cannot do this because you -- that is according to the -- yes. So -- and then you start to spread. And I have been in some sessions of acquired companies, where you talk about our culture, how do we take decisions. Why do we do left and not right? Isn't right not the logical way? Yes, but we stick to what we know. And I think that has served us very well along the years. And when we talk about decentralization, you could think about, oh, but these people are -- everybody is doing whatever they want. It's not like that. We have a lot of work -- in common processes. A lot of work is done here within the business area to align the process across group as well as much as we can. We also have hubs, service hubs, like engineering centers, more than 1,000 people. We have finance hubs, also HR, communications. We work a lot in hubs, providing services to the entire group. And some of the acquired entities, they really benefit from that because that means as well when you have those hubs here, remember, the 3 entities we were talking about: product companies, distribution center and customers. They don't spend time on things, on legal things, on accounting. They will spend time on the business impacting the P&L in a good positive way. But also, we're trying to align as much as possible across business areas or at group level in our processes. We also buy a lot of things together. We have a very active logistic council, where we do bidding together in terms of -- there are a lot of things that we do together. Decentralization doesn't mean, we don't talk, and we don't do things together. I think that's also important. We do try to manage as much as possible. Don't forget, the focus is the business development. We are organized that way because the leverage we have when you penetrate in a market, you get a good market share at a good gross margin. I think the benefit is really, really good. So -- and again, there is so many ways to define leadership. I like this one because if you see what I was talking about the book, and there is also a very nice page in this book here when we talk about leadership model, where we define as our leadership model, the fact that everybody has a mission. Everybody has the opportunity to discuss about the mission with their boss. Did I understand well what do you mean with the mission. Then you build a strategy. And then you deliver results. If you do that in a granular way, you can really build lasting results. And my definition in lasting results, long-lasting results, it's not that you do something, and you get the result in 10 years from now. We have to deliver every day, every week, every month, every quarter, every year. So -- and that granularity and focus we have allow us to do that, give us -- give ownership to our entities to act and deliver lasting results. We have 2 business areas that are not present here today. So -- and I will give some highlights of these 2 business areas. So Vacuum Technique, as you know, focus on semiconductor, but not only, I would like to emphasize, industrial vacuum is also very important. And we have been developing. We have acquired quite a lot of companies and products that we didn't have in the portfolio, and we are getting stronger in the industrial vacuum as well. So but -- and they are also working to add some adjacent technologies that make sense that I will come back later in the presentation with that. But they focus on that the main product lines, dry vacuum pumps, turbomolecular pumps, cryo pumps, abatement system. We were not so strong in liquid ring pumps, but we have done some acquisition that strengthened our position, and we were able to get quite some nice orders. The development, yes, you see we had this super cycle more or less 2 years ago. We believe we are very well positioned in this market. The market will grow. When? We don't know exactly, but the trend is there. I think if you look to public data, we are very happy to be in this market. And I think the future looks quite interesting. And a solid, despite of the acquisitions, we have had solid return on capital employed. And you see we started our journey with Edwards 2014 and has been a fantastic journey. So -- and we are quite happy with the development. Another important journey -- because when we acquire, when we started, we created 2 service divisions, and the development as well has been quite impressive. So very good, very solid development in Vacuum Technique. And to show how do we work with our customers, and I was talking about the service, but the service and the equipment is quite interlinked in the semiconductor market. And I would like to show a video how we work with our customers. Please. [Presentation]

That's a very nice example from Vacuum Technique. You really need to understand about customer processes. You really need to see what is happening, what gases they are using. It's really, really a good interlink between our entities and our customers. So then Industrial Technique. Here, they are focused in several -- they can support several industries in automation in several solutions. So they have a broad range of products where you can do automation and quality control of production process, a good exposure in automotive. They benefit from the EV transformation with several products. But not only that, they also grow in automotive because they offer more solutions, for instance, with all this portfolio of solutions, when you integrate machine vision solutions together with the 2, all of a sudden, they have been through a very nice journey that I will explain a little bit more. But all of a sudden, you combine vision with the 2, you create a complete new market. That's what they are doing, combining these technologies, going to the customers with a different angle to provide solutions, to improve customer productivity and several technologies in the portfolio, self-piercing riveting, adhesive, dispense flow drilling, tightening machine vision, like I said, drilling material removal. And that can be combined in automations that will deliver quite a lot of value for our customers. Good progress over the years, good profitability as well. We really manage on the easy transformation to have quite a -- a lot of orders. If you look to their evolution, quite nice growth over the years. Also, the service performing really well. Again, the focus on service is really paying off. And I would like to give another example of how do we work with our customers, please? [Presentation]

Good example on how do we innovate. And I think that is I'd like to explain a little bit more because what we do in those innovation centers, we bring in the customers and we show all the technologies we have. And the customer is start to say, oh, with that technology, I could automate this, that, oh, and then together, they build a solution, they start a project. I think that is a very interesting way to work and has been served us very, very well. We are quite happy with that approach. So -- but then, of course, we need to continue to grow. And we are exposed as well to global trends. We all are. And some are quite positive. If you take digitalization, still a lot to come in this area with AI that could allow us to sell more to the semiconductor industry, but also will unlock new businesses as well. Developing solutions together with our customers, we will unlock the new business. So a very important area. I was talking about automation and automation journey will continue. I think during the COVID crisis, and then the ramp-up in production, several companies, they realize they need to automate further, and we see more projects in that area. Society is really trying to decarbonize and that we are exposed in that trend as well in several areas of the group. We are also deploying more R&D here to come up with solutions. I think you will see examples from Andrew and Philippe today also in the innovation tour, real examples on how we could also support our customers to decarbonize their production and also support society in this big journey that we are in. Deglobalization here, you do have risks that we try to mitigate. But we should also remember, we are present in 70 countries, and we have distribution in an order of 100 countries. So whatever trend happens, more production in one place or an order, we are also positioned to capture that. And I think that is also something that we should not forget. But what are the fundamentals and the pillars that we use to continue our growth, profitable growth journey? I think, first of all, we want to be position and define niche markets. We don't want to be everything to everybody, but we want to focus on certain markets where we can really find good growth and good profitability. We want to have a leading position. That's not a surprise. The leading position brings volume that is also important for cost leadership. We also want to have differentiated technology. And you have seen how much we have invested, how serious we are with technology, and how much we have invested in innovation lately. Also important for us to have products that are critical to our customers in operations. You have seen the example from vacuum. We are really involved in the production process of some customers, which is very important. A leading service offer, I talked quite a lot already about service, but service is not that you are in the market segment with good service potential, a service should be treated as a product as well. You need to package that as a solution, as a product, because our way of doing is not putting the customer in the corner and say, you need to buy everything from me. You should create value. And I think our service divisions are quite engaged to create value for our customers. I think that is also important. To be global, we always want to be -- to have products where we can be global, very important, diversified customer base. I think I have discussed that brings resilience. We want to go to the market with different brands because you can offer different value propositions. Companies are different, people deciding within the company are also different. Sometimes, they don't like one value proposition. And then to maximize market share, we go to the market with different brands. Resilience, I have talked. I also discussed about our decentralized model. Asset-light, that's your topic, Peter, you come back. Operational excellence, here I would like to stop because I think it's a very important one. And enough of -- operational excellence is the balance between efficiency and also customer satisfaction. If you wait all the way to efficiency and customers are not happy, this is not good. The other way around, you could end up with a higher cost. I think you need to have the right balance. And this afternoon, during the tour, we will give you one another example on operational excellence. Speed and agility, we have discussed about that, but nothing happens if we don't have the right people. So people with crucial element, again, we discussed about how we try to talk about the culture. We also have an extensive program to train the people. But passion, sometimes it's very difficult to create passion. We have to be very good to hire the right people. I think recruitment is very important. And Cecilia is there. She's Head of HR, and we have been working quite a lot on that. And not -- we have to do that in a good way. We have to respect the environment. We have to respect society. We have to respect the challenge we have ahead of us. So we need be as well following that sometimes a requirement, but not only requirement. It's something that we believe that's the right way to work. So another element of our strategy, and I think we have invested a lot is to increase the potential of our existing products. And how -- what is the best example that I could use? If you consider Industrial Technique, in the past, they used to sell tools, hand tools to support production, to make tightening, whatever. Then they come with the electrification wave and the tool that cost in, I don't know, maybe 1,000, if you have a electrical tool, control panel, quality control, it goes maybe to another price level that sometimes 10x higher, 20x higher. That was one journey. But then they have invested further because you can also now automate the use of the tool. Instead of having a person, you have an automation doing, and then you grow the revenue quite nicely with the same focus product, you expand your position. And you can only do that if you invest in R&D. And that's what we have been doing, trying to expand our core markets. And I think these examples from ITBA is a good way because in those projects, to be profitable, we have to standardize. To standardize is a big effort. So we have been working quite a lot on that. Another area that we have been working is to find new addressable market. And I think this picture is not 100% new. If we take compressor technique, we had filtration, chillers, low-pressure, gas, industrial gas, high pressure, and gas and steam compression that we do for quite some times, but we see an increasing potential in that area because you can recompress the steam avoiding burning gas. So it's an opportunity for the future. Vacuum Technique. They added cryogenic pumps, process and diagnostics, liquid ring pumps, like I mentioned, gas vapor delivery systems, and lately, valves for the semiconductor market. The same has happened with Industrial Technique. They added electronic dispensing, machine vision, in-line quality control. And in Power Technique, you will see today as well, surface pump was there for some time. We added a few years ago with steam rental. Industrial pump is becoming very relevant for them. Andrew will talk about and now chiller rentals. So we introduced some new addressable markets with quite a good potential for the future, creating room for further growth and fulfill our mission. We do that inorganically. And also, we do organically, but also inorganically. As you have seen, over the last 7 years, we have bought more than 100 companies. Compressor Technique was more than 60 companies. So -- but we don't want to buy because we have the financial power to do so, we want to buy, first, because it's part of our strategy. I think here, I would like to highlight. Before we do an acquisition, we need to have a strategy. If it's part of our strategy, we are interested. Then we go and we look for market segment. If you look back to the acquisitions we have done in the past, I think you see the markets that we are trying or we -- sometimes we have definitely decided to be there. Sometimes we need more knowledge as well. And we acquired companies that can have some growth potential aligned with our structure. That is very important. And another point that is important is our presence. And there are presence in different ways. We have our local people. So we have people in 70 countries, but we also have distributors. So we have thousands of distributors worldwide supporting us. And I think that is also important part of our strategy. We want to go direct to the market with our own people, but we also, to maximize market share, we need to have partners, and we are very active on that. And I see that we -- I get questions sometimes. You buy quite a lot of distributors, maybe 10 per year, sometimes 20. But if you look that we have thousands of distributors worldwide, I think that is not -- the strategy is not replaced direct by -- indirect by direct. The strategy is to grow to be present in the market. If I need more dealers, we will have more dealers. If we need more salespeople, we will deploy more salespeople. And we also to maximize our presence, we use different brands. I think that is important because we also have different value proposition with different brands. And that maximizes as well our presence. And last, but not least, one thing that is becoming very important lately is the digital presence. We have to be #1 in the digital space as well. And I think we have done very good steps in that direction. But so now, of course, we talk about, oh, these are you going to change the target? No. We are committed to our 8% average growth per year over the business cycle with a high return on capital employed and the dividend promise that we have. But we also want to do that in the right way. We have those financial targets over there. But here, we also have 18 nonfinancial targets that is spread all over the world. In the same way you saw this P&L responsibility, accountability, our entities, they also have these targets here. We really take this serious. It's not that we put the target at group level and group, no, no, this cascades down to the organization. And those 18 targets is also very important and present more and more in our day-to-day life. So with that, I would like to finish my part, and I will welcome now Peter Kinnart. And I have worked -- this is the fourth time that I worked with Peter Kinnart. So welcome, Peter.

Thank you, Vagner, for that introduction. I managed to escape him once, but he caught up with me again. But I'm really delighted to team up with Vagner together with all of my colleagues to support him on his fantastic new mission and of course, to continue to try to make sure Atlas Copco delivers the sustainable, lasting results we have delivered over the past many years. Now Vagner just illustrated briefly the group targets. And I, unfortunately, have a very boring message for you. Nothing will change in this section at least. And I hope you agree with me that boring can be fantastic, too. If I focus just on the 3 core financial targets now, then starting with the long-term growth, the 8%, on average, over a business cycle per year. Then I would say this slide illustrates how we have managed to deliver consistently over the last 10 years at least. Of course, you can see that, over time, it has been fluctuating a little bit from time to time. But overall, in the end, we've delivered even slightly more over those 10 years than our target that we have consistently kept over a long period of time. And we intend to continue to do so going forward. And I hope with the products and all the things that we will show today and the presentations of Philippe and Andrew, we will also be able to give you a bit of confidence that there's a lot of things going on in the pipeline that will actually make sure that this is possible to happen. Then of course, from the growth target from the revenues, we go down to the profitability. And also here, we have gone through quite an interesting journey over these 10 years. One remark is maybe that the small gray part on top is the financial net. It doesn't seem to be so important. It, I think, has been fairly well managed over the last many years. What is really important is that the bulk of this profitability comes completely from the operations. And actually, that part has actually even grown from 72% to 76% over time. Then, of course, when we combine the revenue growth, the profitability that is derived from that with our balance sheet, then we end up with return on capital employed. And there, we continue to believe that we should deliver a sustainable, strong return on capital employed. And that, I think, has also been demonstrated over the years that, that has been possible. And that is mostly due to the fact that we have this decentralized business model that allows businesses to drive their strategies really with a lot of focus, as Vagner explained, into those different markets, together with the teams. And the person that is closest to the problem is expected to also solve the problem and take ownership. And that is why we are able to deliver this capital -- the strong return on capital employed. It's also, I would say, a testimony of our agility and the resilience. And agile and resilient, this is, by the way, a picture out of this famous book that Vagner has shown you as well, indicates that we are trying to make sure that we are able to respond very, very quickly. And again, the decentralized model is absolutely key to that ability. If we were to be central and everything for this big organization should be decided by a few people at the top, it would take a long time. And then we have this lean organization where presidents are talking directly to the general managers in the markets, so decisions can be taken fast. That's agility. On top of that, we have the resilience. And of course, there's a number of different components to it. On the one hand, there is the fact that we have the service business, which continues to grow even sometimes when markets are a little bit down. That's a very important aspect. But both in agility and resilience, the fact that we have 75% of our cost of goods sold outsourced to subsuppliers makes, of course, that when business goes down, we automatically adjust the cost of goods sold to that particular situation. And that, of course, creates not only agility, very immediate response you could say, but also a resilience over a longer period of time. And very often, when we go through a hard time, and we take all these measures to, let's say, adjust the size of the suit to the size of the body, we also come out stronger out of the crisis. And then we are able to take a next step in our growth journey. Then, of course, cash generation. Profitability has been growing quite steadily over the many years, thanks to the -- basically the organic and acquired growth that we have been able to deliver. That is absolutely the key formula to get to this operational profit growth as well. But sometimes, it has not been possible due to all kinds of market circumstances that we needed to adjust to deliver maybe a higher profitability than the year before. But if that has happened, we've at least been able to increase the cash and grow the cash flow. So we have always been able to either grow profitability or grow cash or even together in many, many cases. And at the same time, we also see that when we look at the investments that we are making, even though we have actually increased them quite significantly, specifically over the last 2 years and we've talked many times about that in different conferences we've had and also, of course, in our earnings calls, the level of investments that we need to make to increase the possibilities, to increase capacity, to be ready for, hopefully, an upswing in different markets, have been actually quite -- almost insignificant, I would say, compared to the cash we generated and compared to the profitability we have. So that, I think, is also again pointing back a little bit to our lean balance sheet and our lean operating model. And that's also shown here. We have indeed seen some increased investments. We talked a lot about capacity investments in the United States, in Europe as well. But also in China and South Korea, et cetera, mostly in Vacuum Technique, but also very big investments made in Compressor Technique and into the other business areas. And if I look at the current investments, I would say we see quite a fair split across all the business areas. So we continue to invest across all of them, but it has basically no impact on the relative proportion of our investments compared to the size of our revenues, for example. And also in the working capital sector, we see a fairly stable corridor in which we operate. We have been struggling a little bit with inventories a while ago. Today, we have more or less stabilized that. We are still aiming to bring that down further. On the receivables, of course, we have been selling more. We have been invoicing more. We have had record quarter after record quarter. So obviously, that part of the working capital has been going up, but without any significant or without any increase, I would say, even in risk in terms of collectability of those customer invoices. And also on the payables, we've had a couple of challenges. But in spite of all of that, we are operating within this 10% to 15% corridor, quite stable around 12.5% here on the graph. So I think, again, it is a testimony of the lean balance sheet that we continue to have across the operation. And of course, ultimately, we talk about shareholder return. And if we are generating good growth, which is an absolute key factor in our strategy, combined with solid profitability and the lean balance sheet, we are also able to, hopefully, satisfy our shareholders. And I think if I look at the history, of course, I think the main message here is we've been growing consistently the dividend over the years without any exception, every single year. The only glitch in this graph is actually not a real glitch because it is related to the carve-out of Epiroc, and then we became a whole lot smaller all of a sudden, and still more or less delivered close to similar dividend in that same year. And ever after we've been continuing to grow the dividend. So we live up to our promises, I would say. And of course, the past is never a guarantee for the future, but I hope, at least with a track record that we are showing across these 3 main financial targets, we are able to give you sufficient trust and confidence in the fact that with a very solid strategy that has been consistent over many, many years, we will be able to continue to deliver similar results as we have had over the past decade or so. And with that, I conclude the very boring part of the presentation, saying that nothing has changed on the financial strategy and on the financial targets, and we aim, of course, to continue to deliver on those targets for our customers. And if we drive customer value up, we believe that we will drive shareholder value up just as much. With that, I conclude my part, and I hand back to Vagner for some summarizing conclusions.

Thank you, Peter. So to summarize this event, our presentation, my presentation together with Peter, so I think we should remember a couple of things from this presentation. First, we have a diverse business model with focus in several market segments, several niche markets. We also want to be market leaders in these segments with our focus on innovation and sustainability that is becoming more and more important in many dimensions, in the dimensions the way we want to design and manufacture our product, but also in the dimension that we can develop technology to support society in their challenges. We want to be in businesses that have such strong service offer. And again, I would like to highlight service for us is like a product, you need to package very well and you need to create customer value to be able to be sustainable. Otherwise, you have the customer in a corner, I think that's not a good way to do service, to offer service solution. To have a service offer, I think it's very important. Peter has talked about asset-light operations and variable cost structure and the way we try to really go deep and look into the details, not ourselves, but we create, we give the platform that people can really take ownership and focus on their own results. But all that, a good strategy, is nothing if we don't have the right people. And I normally like to say, strategy is key, but great result only comes when you master execution. To master execution, we need to have the right people on board. So with that, I conclude my presentation. Thank you very much.

Thanks, Vagner. So before the break, the very short break, there is one more presentation and that will be all about Power Technique. So welcome up on stage Andrew Walker.

Good morning, everyone. It's a pleasure to be here. My name is Andrew Walker, President of the Power Technique business area. And I'd like to give you some insight and some view on Power Technique's results and the strategy for our business. Similar to my colleagues, I'd like to give you a couple of facts, market trends, some insight into our business fundamentals, talk a little bit about strategy for growth, how we're going to grow in the future and how we've grown so far. And then 2 slides about our contribution to a low-carbon society and then finally, a summary slide, if that's okay for you. Great. So talking about the fundamentals of the Power Technique business. First of all, there's a couple of market trends going on in our business. And of course, we are quite focused on the construction sector. And you see in the construction sector, this move towards electrification. And it's more prevalent in Northern Europe in California, but we see it happening. So we see a switch from diesel, which is a big part of our product portfolio through electric and battery, and that's happening today. And these products we hadn't got 5 years ago, and we have them now. Reducing CO2 and emissions on-site is becoming more prevalent. And we see our customers are demanding that. And a lot of our customers are switching their products from diesel to electrification, batteries, et cetera. The interesting thing about that is, I believe it creates more business opportunities for us. And I'll give you an example. If we talk about generators, for instance, the barriers to entry to build a generator are quite low. But if you want to build a hybrid generator with battery and diesel power combined, that's a different challenge. And I think that creates an opportunity for us because we're able to do that. So it creates higher barriers for entry and therefore, I think we have a better opportunity in that space. And then there's continuous infrastructure investment. We have the U.S.A. Bill still hasn't fully kicked in yet. We haven't seen all the benefits of that. We see added infrastructure investment in Northern Europe, in Germany and France. And I think that will continue in the next 2 or 3 years. And then when we talk about local for local, for us in Power Technique, this has 2 facets, local for local. First of all, we want to be local with our customers. We have global designs, but there are always nuances and there are always changes based on the specification and engine legislation in the different countries. So hence, we have different products in different countries. And the core product is the same, but we have a different engine. In U.S.A., we have a John Deere engine. In Europe, we have the European engine. So that's the difference for us. And hence, we have a factory in North Carolina in Rock Hill. We have a couple of factories in Europe. We have a factory in China, Brazil. So we need to be local for local. And the other aspect of local for local is in the supply chain. We discovered, unfortunately during COVID that some of our supply chains were much too long. And if you are shipping, for instance, from India to Rock Hill and you have a challenge in logistics, then you're going to have some longer lead times and some problems. And that we've tried to address since COVID because we really suffered on our lead times during that period. So that's another aspect. And we worked very hard to move away from single source suppliers and also to shorten our supply chain. So that's a very important aspect of a local for local for our business area. And then if I talk a little bit about results. In the business cycle, we succeeded to almost double our turnover our orders received in the period. We've also managed to increase our EBITDA profitability by 4 to 5 points. And I can assure you, as a leader of an organization, it's a much happier place to be if you can deliver those results, and it's quite enjoyable at times. And also, our return on capital employed has been quite steady, even though we had some quite heavy investments during that period. So I think it's safe to say it has been a good period for Power Technique over the last cycle, let's say. Good. Then let's have a look at how we function, how our business functions around the world. And if I work, let's say, from your left to right, and talk about -- first of all, to say, we are not 1/3, 1/3, 1/3. We are a little bit different. You will see from our colleagues. We are not as active or as present in Asia as we would like to be. And there's a couple of reasons for that I come back to it. But 36% of our business is in the Americas, 41 -- we're a bit European-centric, 41% of our business in Europe and EMEA, and 23% is in Asia, Australasia. And that's gone up in the last couple of years because we bought a couple of companies in Oceania in Australia. I just been there last month. We are now the biggest business area in Australia. I can -- I'm happy to say. So it means I will spend a bit more time in Australia than I have done in the past. But coming back to North America, you see that compared to the last quarter, our business dropped some 40%. And I'm not concerned about that. We had a huge order intake this time last year, the first quarter last year. And that was driven a little bit, we have to confess, by forward ordering. Our lead times were a little bit too long. So I would say and I think Wagner alluded to it, we had a very solid first quarter. Very pleased with the results in North America. Even though compared to the result last year, it looks a little bit weaker. I'm not concerned about that. Brazil, South America has been very strong for us over the last couple of years, and you see it continues to do so. Europe, a little bit weaker, 13% growth. There is some acquisition effect for sure in there with the new acquisitions we made also a good solid business in EMEA. And then if we look to Asia, we have an acquisition effect, especially in Oceania there in that business in the first quarter for sure. And the interesting thing is India for us that has been rather weak over the last couple of years is now coming back, and China is solid. So Asia is developing for us. So that's a little bit an overview geographically of how our business is developing. And when you're thinking about Power Technique, you probably think construction. But, in fact, only 30% of our business is focused on the construction sector. You see almost 46% is in the process industry and manufacturing industry, and that's due to our rental business. And let's pivot away and I'll come back to what are the newer businesses that we bought in the pump business. So we are certainly doubling down a bit more on manufacturing and the process industries. And that's part of our strategy to be less reliant on the construction sector. It's a very important sector for us, for sure, especially for the 2 equipment divisions in Power & Flow and Portable Air. But you see it's not as prevalent for us as perhaps it has been in the past. So that's a change in our structure, if you wish. And then there's others like events and environmental space as well. So coming to the Power Technique product portfolio and, let's say, our focus areas. We start on the left here with Portable Air. Portable Air is really a core business for us in Power Technique. We are a clear #1 in Portable Air business. The interesting thing about the Portable Air division is we are everywhere, we are a global player. And most of our competitors are regional. So there are very few global players in the Portable Air space, and that allows us to develop a very nice business. And our core components are the same. But as I said earlier, we have different products in different markets and we have different -- we have factories in each of the markets. But very strong business development, mainly an organic play, we don't do so much acquisitions in this space, although we're working on it. But there's been an organic plan. We're quite strong here. I would say, probably our strongest division. Then Portable Power and Portable Flow, we are not #1 in Portable Power. We are a good #2 in most regions. The interesting thing about Portable Power becomes, I alluded to it earlier, it becomes more interesting now because we pivot away from pure generators to energy storage, hybrid power, solar. It's becoming a much more interesting space than it was perhaps in the past. And it's quite exciting, really the things that are going on. If you think about it, we didn't have energy storage 5 years ago. And now if I talk to my guys in the field, in this space, maybe 50% of their quotations are in energy storage or in batteries. So it's becoming, especially in North America and parts of Northern Europe, very prevalent. And then there's Portable Flow, the other leg of this stool, so to speak. This emerged from an acquisition we did a couple of years ago in 2016 for [ ESCO. ] We started building surface pumps or diesel-powered pumps. And now we have a fantastic portfolio of pumps, so really interesting significant business for us now. And the interesting thing about Portable Flow is the segment of the sector is as big as Portable Air. We are just not as big in it yet. So I think it's a nice runway of opportunities in Portable Flow for the future. And lately, we started developing electric pumps, so portable electric pumps, as an adjunct to our portable diesel pumps. So very interesting space. You may recall, we just bought a company called Sykes also in the Portable Flow space. And so becoming increasingly important for us. Then the Service division. I think we always say that service is really a backbone for Atlas Copco. We have a service division in each of our business areas. We are no different. We are very focused on service. I love service myself. I was also President of the Service division a couple of years ago. I like it. And I think it's really important generator of income for us. We treat it as a business. And I think because we're focused on it, we really do well. We really double down on how we do Service business. And that's the purpose of having a separate division. And then if we talk about other parts of our product portfolio, Specialty Rental. And it is rather special, Specialty Rental. There is no other division in the group that does rental. And when you look at the Specialty Rental division, they are renting products to our customers. The backbone of Specialty Rental is portable oil-free compressors, and that's how we started. But I'll show you a little bit later that we're pivoting away, and we're less reliant on oil-free compressed there than we were in the past. Very nice business, good profit in this area, and growing nicely. I'll come back to that later. Then last but not least, the last pillar is, and the newest one is Industrial Flow. Perhaps you know, we have been studying the pump business for more than a decade in Atlas Copco. We have been looking at the flow business. We've been wanting to step in for some time. And we bought a small company a couple of years ago called Varisco, which had an Industrial Flow business. And from that small beginnings, we have been looking, we have been studying, we have been looking at companies. And in the last 2, 3 years, we bought a couple of companies, and I'll come back to that later. I think really interesting segment, Industrial Flow. We think it's close to our core we think -- we're not experts in industrial pumps for sure yet. But it's rotating equipment, has good service. Some of the customers are similar, are common, and we think we can develop this further. We've taken a step in, in this space. I'll come back to that later. So if we come back to the strategy for growth and what are our focus and our priorities. I use the same slide that Wagner used, how do we do more in the core? And we want to have increased business and look for more runways for opportunities to grow. In Portable Air, it's definitely an organic play. We have dedicated people. We're #1. We keep innovating. We're designing new products. Every quarter, we release new products. We go for innovation, we go for efficiency, not so much acquisition or organic growth in that space. Portable Power & Flow, I mentioned that we have dedicated people now on flow. We have dedicated people on power. We have done some acquisitions. I think there's some runway for more growth in that space. For sure, we're going to go for inorganic growth as well in that space, and we are growing our product portfolio. I was in Las Vegas at a fair last year, looking at the portable flow competitors. And I said I was looking at our newly developed products and said, yes, we can compete in this space for sure in Portable Flow. And then Industrial Flow, I mentioned at the moment where developing a parallel set of customer centers for Industrial Flow because it's a little bit different in the Industrial Flow space from our space, our customer centers today. And we have a parallel group of team. In fact, they're meeting this week in France, to discuss strategy and how they will sell our portfolio of pump products. And then Service, it's about installed base management, how we manage our installed base. We are connected. We are tracking. We are developing service products. We are doing all of the good things that we do in all business areas. And the interesting thing is we can lift up some of the things we do in Portable Air and we drop it into Portable Flow, and we will drop it into Industrial Flow. And then Specialty Rental. It is about organic growth. There are plenty of applications out there that are increasing. We will increase our geographic penetration in Specialty Rental. We are not as prevalent in rental in Asia as we would like to be. There isn't as much of a rental mentality in Asia as in other regions, but it's coming. For instance, we opened a new depot in India. So this is a seed capital that we are investing in. We have done it in China, very small depots, but they will grow. And over time, as the rental mentality develops in Asia, we will grow our Specialty Rental business in that region. And one of the things Wagner talked about was innovation. And we do a webinar every quarter for all our people. And every quarter, we talk about the new innovations. It's amazing. We are presenting new products from our product companies every quarter without fail. And we have some 46 new products last year, and that could be a complete product line, not just the product. It can be a product range. And this, we do continuously. And I think it's interesting for some of the newly acquired companies that we just bought. They are surprised that this quest for innovation redesign that Atlas Copco has, and that we will try to instill in our new acquisitions in the coming years. And I mentioned battery storage as a key component of our Portable Power pillar. Energy storage, lots of our customers are looking for it. I come back to the micro grid. You will see it in our innovation station today. We've built a small micro grid for you to look at, a very interesting space. PTE VSD 900, an electric oil-free compressor. In the past, we were known for renting diesel products. Now we have an electric range. Very interesting for our customers who want to save on carbon. Electric surface pumps, I mentioned already. We switched to pivot from diesel pumps to electric surface pumps. And we have solar light towers. We also have hybrid light towers, small part of our range, but it's there, battery-powered and diesel powered together, very interesting for our customers. We developed an 8-tonne steam boiler for our rental business. First 8-tonne steam boiler that can be used throughout the world. So we can ship it from U.S. to Europe, new rental in different parts of the world, very important because it's quite a capital investment that we make in our Steam business. And I'll come back to Steam Rental in a moment. And then the normal stuff in Portable Air where we make a smaller, more efficient, more powerful air compressor for drilling. It goes from a 4-wheeler to a 2-wheeler because that's what our customers want, selling very nicely, and that's just normal innovation, the normal stuff that we do in our Portable Air division. So continuous innovation. We keep trying. There's always a better way, we say, and it's in our DNA, I think, to keep innovating, and we spend a lot of time and effort on that. And I will not show it, but you will see today the first battery-powered portable screw compressor in the world. We launched it last year. We were the first, very nice battery-powered portable screw compressor. One of the things we discovered through our connectivity is that the average usage of this unit is less than 2 hours a day on site. So it was perfect for battery driven. And you'll see that today. I will not show it right now. I keep it as a surprise for you. So then if we talk about extending our core, and I use the same format. In Portable Air, I said, it's mainly an organic play, but we are looking at portable air treatment as an adjunct to Portable Air, and we are looking at nitrogen -- portable nitrogen, more and more sites are using nitrogen. The cost of shipping nitrogen is very expensive. So we have, we're developing a portable nitrogen station so that we can connect it to our portable compressors, and we can deliver nitrogen to our customers. In Portable Power & Flow, we already have surface pumps or diesel pumps. We have battery storage. We'll continue to invest in further ranges of battery storage. We have solar and we will develop further in the Portable Flow side. On the Industrial Flow, we have a couple of technologies already. We have gear pumps. We have progressive cavity pumps. We have screw pumps, we have metering pumps. We would like to broaden our portfolio of technologies on the pump side. One of our goals was to do a roll-up and we're sort of not halfway through that process, but we're in that roll-up phase now. And I would like to add a few more technologies, and we create a portfolio of technologies of positive displacement pumps. And in Service, we have been very focused on Portable Air service, but now we will do battery storage service and flow service. So changing our [ pump head ] servicing and supplying spare parts for Portable Flow. We will do it in the same way as we did Portable Air. So the interesting thing is that it slows down, sorry, about the pump into service and you have -- it goes from Portable Air, Portable Flow, Portable Power into the Service division. And then finally, Steam Rental, a nice runway of opportunities. A couple of years ago, we took a step into Steam Rental. It's now a significant business. We're probably the biggest Steam Rental company globally. There's a lot of regional players. But globally, we're probably the biggest one. It's a very nice business, very special. It needs a lot of support. Steam engineers are not easy to find. We have stepped into Flow Rental. You may have seen we bought the company in Australia, NPE, so we have a significant business now in rental of pumps. And we do also some treatment, some water treatment. Because you cannot just take water out of the ground or out of a site and pump it and put it in a drain, you have to treat it. We are learning. So we are learning about water treatment. And then we took a small step into Industrial Cooling. Last month, we bought a small company in Belgium, very nice business. It's our first step -- actually, it's our second step. We had a much smaller one in Spain. It's our second step into Industrial Cooling, and this we will do some more. So Industrial Cooling Rental, I think, is another quite interesting step out for the rental team. So you see we continued to extend our core. And I think most of these businesses are quite adjacent to what we do today. And I think there's never been a more interesting time to be in Power Technique than right now with all of these step-outs that we're working on today. And talking about that, what about Industrial Flow? Well, we see further growth in our Industrial Flow business. This is a very interesting space, the environmental space, the process industry, the food industry. And you see the different brands we have bought so far. I mentioned Varisco in the early stages in 2016. We bought LEWA, a metering pump business in Germany. As a bonus, we got a packager called Geveke as part of that deal. So very nice packaging company in Amsterdam, actually. We also bought -- we bought Wangen, a progressive cavity pump company, mainly focused in Germany on the biogas industry, not really working outside of Germany so much. So a fantastic opportunity for us to expand globally their business because they didn't have that, let's say, muscle to do that. And then the last one, we just closed it last quarter, it's cracked a really interesting Gear Pump business also based in Germany, very nice product range, small gear pumps for OEMs for different industrial applications. Again, not so -- what I see, not so sales and marketing focus. So I think we can bring that expertise to them. They're very nice products. And as I mentioned, we're building this suite of technologies. There's a couple more I would like to add, we would like to add. And then there's an opportunity to go deeper into the segments as well. And the reason we focused on positive displacement pumps is because we think that is the most interesting space in the pump sector for now. It's higher than average profitability. It's quite fragmented, the business globally. And we think we can do more in that space. So we would like to go wider in the technologies and we would like -- if I take LEWA as an example, LEWA is in the metering pump and the process pump industry, but they're right on the top end of the segment, really high spec, high-efficiency pumps. But there's a whole plethora of, let's say, opportunities in lower spec, plastic metering pumps, for instance, and we would like to go deeper in that vertical. With LEWA assisting us, of course, because now we have a team of guys who understand this business definitely much better than I do. So -- and so that's our intention. So now let's have a look at a short video about this couple of companies. Always good to see a bit about them. [Presentation]

Great. I love those product company videos, don't you, the problem is they become dated almost as soon as you produce them. So in a couple of months, it will be out of date. Great. Maybe I could jump to Service now. And Service in its broadest context because we have -- basically, we have 2 Service divisions. We have our Specialty Rental and our Pure Service division. You see if -- and they've been developing very nicely as you see, and if you consider equipment has a CAGR of 9%, well, our 2 Service divisions together have, yes, considerably more 13%. And it's around 42% of our total business, which is significant because Specialty Rental is quite significant in our business also. So nice growth, nice development and also very nice profitability in these businesses makes a good contribution to our overall result. And if I double down on Service for a moment, and I think, as I said, it's really in the core, in the backbone of Atlas Copco to do service in a good way. And if I go from right to left, I think we master logistics through our distribution centers. The interesting thing as a business area President is, I don't spend any time on logistics for spare parts at all. We have the distribution centers. They do their thing. They're very professional. We have a Board meeting once a quarter and they do it. And we deliver every day, next day spare parts to our customers, and we're quite good at it. And the interesting thing about having dedicated service teams is they only focus on service. They're not focused on equipment. They're not discussing market share. They're not discussing how to sell equipment. They're focused on service products, how to deliver spare parts, how do we perform? And I think that's one of the key success factors, if you wish, of our service operations as we focus on that, and those guys, those people, they just do that. And I think Vagner mentioned earlier, we treat it as a business. It's very rewarding if you do it well. And we have dedicated service offers. We offer service contracts for portable equipment. And the interesting thing, I think if we look at the acquisitions, they are a little bit more underdeveloped than we are. It will be interesting to bring some of our processes the way we do things to the acquisitions from a service perspective. And then we're very proactive on the installed base. We have connectivity. We're connected. And especially for us as a former service guy, knowing where your equipment is and when it needs service. I know it sounds basic, but for us, especially with portable equipment, it's really essential, and it gives us this opportunity to do more business. Then talking about Specialty Rental. Rental is -- it's a whole business within the business. It has everything. It's a really interesting business. They do engineering. They do project management. They do sales. They have their own service team. They have their own operators, and that's what makes them successful. And they're all really focused on rental in that division. They have specialized fleet. We're heavily investing in the fleet. Of course, we have this unique advantage with our oil-free fleet, which we take advantage of. But I think if you look to this picture, where you have maybe 34 wheel portable oil-free compressors on one site, there's nobody else can do that like we do. And then there's lots of special applications. And I think this afternoon, you're going to see in the innovation center, the guys are going to talk about some of those special applications, very interesting, some of the specialist applications they're doing today. And it makes it a very rewarding business for us. And I talked about air being the real core of Specialty Rental, it has been for years. But now we developed a decent business in power. We have worked on our power, and we're pivoting towards hybrid power. So we're developing that leg of our business. We invested in a couple of businesses in pump rental. So we have quite a significant industrial rental business in Specialty Rental. And we've taken our first steps with steam a couple of years ago. As I mentioned, we have a significant business in Steam Rental, a tough business to be in, but we're investing in new boilers and it's really special. And in the last couple of months, we started investing in industrial chilling, Industrial Cooling. Also very nice business. I visited last month, the latest acquisition in Belgium. It's rather small still. But from small things, we grow, and we expect to continue down that space. So you see we start to get instead of just one leg on the Specialty Rentals still, we start to develop 4. And when you do that and when you add some legs, it gives you some accelerated growth. And that's what I see. This is a function in Specialty Rental of some of that activity. And I say to my Specialty Rental guys, if we can do more business at this level of margin, then it's very rewarding, and that's what we try to do. So you see the CAGR of 12% is quite reasonable. Then just switching to low carbon society. We're in this transformation process. I bought an EV car. I don't know many of you have an electric car, but I have one. I never thought I would see one in my lifetime, but there you go, I have one. And the interesting thing, if we look at the site, and we made a micro grid for you, so we're going to show you this today. The heart of power to a site used to be the generator, which is on the left here. But now the heart of the site is battery storage and the generator is just one other power source to battery storage. And you can supply power from the grid. You can provide power through solar. And then we already have all of these products here today, electric compressors. We are supplying cranes via battery storage, light towers, of course, electric pumps. There are more and more electric excavators and other construction equipment and a portable compressor as I mentioned. So the site of tomorrow is changing. We already see in certain parts of the Netherlands. This is already compulsory. You cannot bring a diesel-powered unit on-site already today. And -- so we are going to further electrify our portfolio. We're already on that journey. We're moving in that direction. I mentioned we have a full range of electric portable compressors. We have a full range of electric pumps. We have now our first battery-driven pump. Maybe we'll have a battery driven -- sorry, a battery-driven compressor. Maybe we'll have a battery-driven pump very soon. We always continue to innovate on energy efficiency. Digitalization as part of our DNA. We're very efficient in our logistics. We even have a couple of battery-powered trucks now supplying some of our distribution centers. And we try to have a lower energy footprint in our operations. Most of our factories now today have solar panels. There's not a huge payback, the return is quite long. We wouldn't have done this maybe 10 years ago, but we do it. All of our factories have solar panels on their roofs. So you will see that we are using green energy in all our factories today. These things perhaps we wouldn't have done a number of years ago. But we want to contribute to the low carbon society. So in summary, let me say I hope you see the interesting aspect of these 4 pillars. As I said, there's never been a more interesting time to be in the business area. We see more opportunities in Portable Air and Portable Power and Portable Flow. We've done this step out into Industrial Flow. It's a very interesting space. We're working on continuous development of our core business. We are going to grow organically these parts of the business, but also inorganically in the selected space, as I mentioned. There is increased service potential, especially through our acquisitions. And I think we will go for further strategic acquisitions. We're busy with it. It's not always visible, but we are very busy, and we will look for more. So thank you very much. That ends my presentation.

Thank you. I don't know if you reckon, but you have some candy on your table. It's this gummy bears and they wouldn't be possible unless we would.

We're pumping that stuff with...

Your product is something that [indiscernible] very good. Okay. We're going to have a short break before our last presentation. Those of you who have any changes in your departure, please contact the registration desks. Those of you who haven't checked out, please do so. And all of you, please be back at 10:35. We will start again at 10:35. Those of you in the web, 10:35. [Break]

Welcome back. Welcome back. I hope you enjoyed the gummy bears. So now it's time for the last presentation before the question-and-answer session. Welcome up on stage, Business Area President, Philippe Ernens.

Good morning, everyone. Maybe, yes, to present myself, I joined at Atlas Copcp in '95, and I was previously up to 2 weeks ago, the President of the Oil-free Air division. And before that, I was in charge for the Airtec division. So I want to ask to follow the same agenda that Andrew has followed. So a bit about the market and where we are, and I think why we believe that there is a very important future for Compressor Technique. Then our strategy how we want to go further. Then I think very important for Compressor Technique is our contribution potential in the lower carbon economy for the future. We really believe that we have a big role to play there. And I will try to illustrate that, and then I will come to a close summary. So maybe starting with the fundamentals and where we believe the market will really help us to grow and where we have a big role to play. I think there is definitely a big need for improving efficiency of all of the utility in our customer base. And we have, with our solution, a very big role to play on that. And I will ask [indiscernible] during the morning, but after this afternoon, you will see during the visit that we develop a lot of solution to optimize our compressors, but there is much more around compressor and I think I will also talk a bit on energy recovery and the role that has to play on CO2 reduction into the utility room of our compressors -- of our customers. Then I think also important and play a nice role as for the last year, and we're convinced that it will continue to play a very important role in the future. There is a lot of investment into what we call the green economy into battery business, into solar panel, into electronics. And we have also there a very nice role to play. Then I think as Atlas Copco, and that's really one thing that we really try to do maybe better than others. We want to have the best total solution in a global way. What I mean we believe really that end of the year when the total kilowatts are coming out of the utility room, we want to prove that we were there the best. And it's not only just a number when we publish, we really want to prove that the total solution end of the year as the best life cycle cost, and that's coming from our machines, but also a lot coming from the way we do service and support our customer there. Then a very important trend for Compressor Technique is as for everything related to data. Compressors become more and more complex. We will also show you that it's not just a mechanical draft and there is a lot of electronics, a lot of data and a lot of regulation in the compressor coming on board. But -- and again, here, it's not only compressors. We have a total solution, and a total solution generated a lot of data, but that's all required a lot of optimization. And that we can -- with our data-driven approach, we can really contribute and help a lot of our customers to have the best solution. And then last but not least, there is also a lot of new application for compressors, and we want to play a role on that. There is other gases than air becoming more and more important. And also there, we have a big role to play. So when we look a bit on our order received in August quarter 1 compared to quarter 1 last year, and [indiscernible] bit fast, but last year was, as Vagner mentioned, was extremely strong for Compressor Technique also. I think we also delivered a good quarter 1 this year. Of course, there were a few very big orders for gas and process that we could not fully repeat, although it was as they think very solid. When we look a bit of distribution over the world, I think we have a quite solid 1/3, 1/3, 1/3 balance for Compressor Technique. So I think we have, over the years, really realize as already a good balance. And we believe that being present all over the world is very important because different market, different needs but also keep you sharp and keep you competitive. Some markets are very price driven, other are much more to the efficiency, some more on the total solutions. And I think with this approach, we can really be best-in-class in all solutions. In quarter 1, I think looking for Europe was solid. I think we had a solid Europe with very good Middle East also. North America was acting as for us quite okay. The number is a little bit lower. But as for last year, we had a few big projects that we could not fully repeat. We have a very solid South America with Brazil doing very well. And then in Asia, a bit mixed picture. I think it's not a secret that, also China with a bit recalibration on the battery business. We also see a bit of impact on that. But in total, I think when we also calibrate for the big gas processor project, I think the picture was good. And also here, we see a very good India and good development in the region. Okay. I think I will be boring, but I want to repeat and even for Compressor Technique even more than for other BA, I think we are present in all industry. And we really try to keep focusing on that. We want to be in every industry in the world because it gives us finally, present very good resilience. But this also makes that when some segment goes up, others we can compensate. So you will see that although for us, electronic and automotive are very important. They are not dominant. We have a lot of application in the process industry. We have a lot in general manufacturing. Also construction, there is a lot of innovation into insulation material, cement industry required to decarbonize and so there's a lot of nice application coming up. Then when I look to product, and I will ask to illustrate that we came from compressors. And I think also on compressors, we have relies our range of product. So we came from typically the 7 to 10 by application, what we call medium pressure. And over the years, we have built a lot of new solution and go to market what we call low pressure with the 0 to 4 bar market, but there's a very high pressure. And I think the hydrogen market is demanding extremely high pressure. We did that first with the CNG compressor of natural gas. And now we use the same knowledge and technology to go also to the high pressure required by the hydrogen world. And we can reach today for this 1,000 bar needed into the hydrogen industry. On the other side, we also go to bigger and bigger machines. And I think we do that in the normal air application, where the electronic world are request for more and more bigger installation. I think the chips industry required a lot of compressed there. And also, they are demanding bigger machines, and we provide the solution. But on the other side, as for the CO2 compression also they have think a very big installation needed and also there with the gas and process solution, we can, in a very efficient way, provide technology that really make the job there to compress CO2 to the 80, 90 bags that are needed there. We try to be technology agnostic, so we really believe that we need to help our customers to select their best solution for their application. We don't defend only 1 solution. And we believe that we can -- on this being quite, I think, on the lead in the way that we can provide all the solutions and we don't -- we can really be the customers look to the comprehensive solution and technology that was the best job for them. And from compressors, I think we have now over the last 10, 15 years, has to develop a very nice journey into a treatment of the air. So as you know, when you compressed air, there is a humidity in there. When you compress it -- this immunity come free. And therefore, customers mostly always needs a solution to the -- and that's the reason why we have developed a lot of different solutions to do a drying of compressed air. And I will come back on that because this technology also we will use more and more in new applications in the future. When you compressed air, you also collect all the dust who is present into the air, so you need filtration. And also there, we have from designing, really understanding all filters works, and we have very good engineers also on that. We produce our filters also ourselves, and I think we acquired unique there ein the compressor world, and we can then provide us for the best filters and so to our customer to the solution. That humidity that we collect from the air, that condensate, you need also to release to the external world. And also there, we have developed a good solution to treat the condensate and to be able and to support our customers to release it to the outside. The fact that we are very good in air compression has allow us to build a very strong journey now into new gases. And I think a very interesting direction that we see for the future and happening now is on-site gas generation. I think we have this, for the very big customer, you have this electrification process, but more and more customers. And as for that, we have seen us during the COVID. When we have a bit less demand in purity and as a big transport cost to bring your gas on-site, the results of a very nice application for on-site gas generation. And also there, we have developed very nice technology and the building blocks to do -- to provide customers with on-site generation of nitrogen and oxygen. And this technology, we use more and more now to new gases. And I will answer during the morning, but I saw during the afternoon, we will present to you what we do into the hydrogen and CO2 world because the same technology there is a very good base to be present into that world. When you compressed air, you create a lot of heat. You -- and the compression that heat that you generate, you need to cool. And we want to -- as I said, we want to provide the total solution in the most efficient way. So it's very important, we believe, not to own with -- we provide the best compression solution, but that's how to provide close to that compressor solution, a very efficient cooling solution because as for there, we want to minimize the number of kilowatts you need to put into that solution. And that's the reason why we have to start to develop a journey to provide our customers with the most optimal cooling solution going from quite traditional solution, but that's all going -- that's so then to chill it when it's needed for the efficiency of the total installation. And that bring us to the next step that we believe that heat can generate a lot of benefit for customers. And that's the reason why we have answered this energy recovery solution, so the heat from the compression can be used in a very positive way, and we also develop a nice solution on that. And to be able to do that, you need a very good control of the installation. And Compressor Technique is really going more from a mechanical driven technology, very now much more to more software and engineers for doing that and central controllers, and we have invested a lot also to develop that technology and to have that on board. I will ask [indiscernible] to illustrate that a bit later on during the presentation. And then last but not least, I think it becomes a very large portfolio, a lot of technology. We have been always very good and very focused on maintaining and service our compressors with compressed Service division, we also a large scope to make sure that we can touch all these new components that we are developing and do that in a very intelligent and smart way. And that's the reason why we have the different value proposition in service with this auditing service plan. And also that I will try to explain in a simple way of it works. And this afternoon, I believe we have prepared also a nice presentation on all this connectivity lead to a very intelligent way to do service and really creating value for our customer. So I prepared the 9 blocks that we believe are the building the cornerstone for our goal. And it starts from a very high focus on R&D. So I think, and we have, I think, from history, a very good knowledge on the mechanical part. And we are now really on our R&D and so investing a lot to really be part of that digital transformation. So a lot on going there. Then a building block who is also adding more and more important. And when we visit customers, and I have the chance to do that quite often. When you connect with a bigger company, they all have a very high plan on sustainability. So everyone is expected to reduce the CO2 to be really part of, I think, this ambitious target that we have to not having a too high heating up of the world. And I think understanding where we can help the customer is very important. And so I think a lot of focus and activities already all going on that to understanding where we can help customers. And we also try to really state a bit or we can do that. Then of course, I think the traditional thing that we need to do in Compressor Technique is to develop a very efficient compressor. So we will definitely not stop in that. And you will see also during the visits that there is still a very nice improvement on going. And I think as a nice performance improvement we can bring to customers in the more traditional part of our product. Then, we believe that we are a market leader, but we want to even be better on that. I think coverage, we are not today touching 100% of the potential. So also there with the digital tools, we're hitting a lot of investment in the marketing. We believe that we can cover even better. And I think Vagner explained already that we have our customer centers where we have the direct sales as a big focus. But we do also OEM. And I think for new application, OEM have sometimes have been important. We have definitely distribution also very a product, different value proposition. And so there is a very large access to the market and managing that in the best way is very important. Then as said already, I think every want to extend the offer. We want not just to deliver the product, but we want to deliver also a very good service, and we want to do that to this adjacent product. So also there, there is a lot of knowledge that we build up to make us capable to do that. And then also something that we believe is very important. We want to do the service in the most efficient way. Our focus is that the total life cycle cost of our machines are the lowest possible. And what does it mean that from the development up to the service or we do it, we want really to do it in the most efficient way. So extending the period between services for us are important. When you do service to do it in a very efficient way to minimize the downtime is very important. So a lot of focus also there because we believe as Vagner mentioned that to be very long together with our customer, is really about heating that value. And it's not doing just a service to put customers into a corner, it's really to show him that by doing that with us, it will have the best life cycle cost. So a lot of focus there. Then I think we also learned during the COVID that okay, our lead times have been a bit tougher. So -- and we had no so the chance to be supported to do nice new investment into our factories to increase our coverage in the world to be also very well balanced and to have 4 factories now a new big one coming in China. In India, we are also investing in Europe. You will see also today, we keep investing and also in North America and Brazil, we have nice investment in going. So we really want to be ready for what we believe the future goal of Compressor Technique. Then I think Compressor Technique has a very large scope. I think a lot of innovation, a lot of new product coming. And I think also very important, we have a high demand for very well educated and passionate engineers. So I think on that, we focus a lot. We do as a lot of direct sales. So I think a lot of investment in the 70 countries that Vagner mentioned into very strong salespeople, but as for service technicians. I think these are really our touching point with customers, and I think we invest a lot to have these persons and colleagues really on the best level. And then also, we believe that we cannot develop everything fast enough organically, and that's the reason why we do also acquisition on adjacent technology in the same way as Vagner explained in the morning session. Then I think to not make it too complex, I think we try to really build our future on a few platform. And I think the first one is definitely compressors. We have been very strong in compressor for air. And we are transforming this platform and the modules and the knowledge and the technology that we have developed there, also encompassing new and other gases. And so that's, we believe, a strong base to now go to the CO2, the hydrogen, the nitrogen into these new gases, but the so to go to higher pressure to go to lower pressure into compression. So that's an important one. The second one, and I think very promising and compressors by definition, when you compress every gas, you create heat. And in a way that's it, if you can utilize it hit in a positive way, it's heat coming when you feed your compressor with electricity is also heat coming from a green source. And I think a lot of customers really struggle to convert the gas heated heating process to something that is not using a CO2 emission process. And compressor can play there very nice role to provide that. So that's the reason why we also invest quite a lot in this terminal transfer, and I will explain that a bit later on more in technology. Desiccant second technology is material that allow you to absorb humidity. For instance, that's where we started. But that same material is also allowing you of a very similar to separate nitrogen or oxygen from compressed air, but that's how to remove humidity from CO2 to purify [indiscernible] hydrogen. So a lot of knowledge there into desiccant technology allow us to participate into these new industries where I think we can really provide solution which are quite unique. And then filtration. The fact that we have developed over the last 10, 20 years, So filtration capability and knowledge in-house is also really an enabler for us to also now participate into, I think, a larger scope. So we can do on us for filtration for other applications than the normal 7 to 10 bar. We can go to low pressure. We can easily also connect to very high pressure in the compressed air, but we can do it also for other gases. And I think every gas that you compress need filtration, and we will be able to provide us this solution in a very efficient way in the future. Important for gas, but we are also very close in the utility room. So there is also order liquid to be filtered, and we can also connect in that direction. And then last but not least, I think our solutions become more and more digital based. And I think we invest a lot into software and that knowledge needed. I will touch that a bit further in the next slide. Compressor Technique do us for quite a nice journey on innovation and also Vagner under his lead us invest a lot and support us in the division to contribute into that innovation in new products. So I think there, we are really doing well on the product. But that's why in service a lot is ongoing. So we also have not innovate only in product but also all we do service, and that's the reason why we have this connectivity on both of the machine and we have now a more solution linked to that and leading to this optimization of our solution. And then the digital journey is -- maybe you see most of the time the digital journey on the service side because we talk a lot on SmartLink, and we will talk more today on that. But that digital journey is a full part of our development journey. And I believe that the fact that we have in Compressor Technique a very long history in developing compressors and these different building blocks and doing it in a very model-based way is also today a very good enabler to make it the digital transformation also I think better than a company who will just based on data they collect. We have, I think, a very good collection of data, but we have had a very strong model coming from a research laboratory and putting the thing together make that we can really make also into the digital journey, feel the difference. And then to illustrate a bit this innovation, I will select a few one. I don't want to go too much on that because you will also see that more in the afternoon. But the first one is a small all injected compressor and [ Seth ] this afternoon our VP marketing in [indiscernible] will present that machine in detail. And I think you will see us so that, that machine is really not only just develop for having a very nice performance in a steady state application, but really developed to be over the full year running into the best operating mode. And I think that's really what's meaning our message is to the customers. We want to provide you a solution that really, end of the year, will provide to the lowest energy consumption, not just in a moment, but really fully over the year. And you will also see that there is a lot of electronics, a lot of software into the machine. And that today, the mechanical part provides some performance improvement, but even more the control or the software that we put on the machine, provide you even more performance improvement. In the middle, you have an oil-free machine and as for the same philosophy, that's the reason why select. And this machine is a new [indiscernible]. And traditionally, it was developed running on a very big mechanical gearbox. And today, you have 2 compressor stages. And today, we have every stage as it on motor, on drive, on controller. You have also the modularity and the flexibility to adapt the machine into every condition that the customer will phase into a real world. And that's where we believe we really provide innovation that really matters into the real operation of our customer. The last one is air treatment solution, drying the air and also based on absorption technology. And that technology is very unique because nearly using 0 external energy, only using the heat of the compression, you can reach a due point of minus 40. And I think that's a very important point because in electronics, that's the humidity level [indiscernible] in the application. And we can provide that with 0 energy consumptions. And that's I think very important and also where we can create really the difference for customers. Innovation and product is very important. But as for innovation in service is for us a key and I think for the ones who follow us quite long, you know this service led us a bit where we have a focus to improve the machine availability and that's really our focus. We believe that for our customers, it's super important that the machine has the highest uptime possible. And that's the reason why, okay, we do power delivery, but we have proven and we have data and we see more and more penetration that a service contract is really the way for customers to improve this uptime of the machine. So that's a bit what we have done over the last 20 years, but now the last 5, 6 years, we go more and more to the next level and the next level is coming from the data connectivity that we have on the machine. We can understand better and better over the year. All the machine is running, and we can then bring us optimization. This optimization can be directly into the machine that from the remote center, we do it nearly online, but we can also over time, eventually propose a new solution, a new machine who can then complement the utility of the customer and make its total solution even more efficient. So that's really the direction that we go. And we believe that by doing this way, we create a heavy value and we can also really bring to and that's where the graph shows you from high life cycle cost to really low life cycle costs. And that's where we believe that this model, providing more service is also providing a lower cost for our customers. And I think, therefore, it's a win-win for both party. And I think we are doing that quite well. So, we have, as Andrew present, we have also a good penetration in service. And I think you can also see that the service strength is also nicely growing. There is always a little bit of delay. We have provided a lot of new machines to the market the last year and you know you need to start up, you need to commission. So there is always a little bit of delay. But adding the stability into this ratio between [indiscernible] service is really proving that we can capture, so this new machine in new installation, we also captured very nicely at the service potential. And we want to keep doing that and keep doing them even further. So I think a very important pillar is that all our machine leaving our factory are today connected from the factory. We have learned that when you need to connect 2 cables into a customer, it's very difficult. So that's the reason why we went to this 4G and 5G connection solution on the machines. And yes, this solution has allowed us now to monitor more and more machine and also to provide data to our central controller so that we can have also then leading to a more smarter service. So we can now go for more reactive to more proactive, so we can really detect where the service time is needed. And also this afternoon, we will try to explain you a bit how we do that and how we based on the data and some artificial intelligence and these physical models of our machine, we can really go to the customer and say, it's a customer by doing a service on this moment, you will also have the lowest energy consumption in your installation, the lowest downtime and have, again, the best availability of your installation, but also the lowest energy consumption. This is really on our machine, but there is also a lot around. We have more and more new accessory and [indiscernible]. Also in utility room, very often to [indiscernible] have some leaks. It's a very complex network of piping and a lot of machines and history. So also there, I think we can base -- we can do legation on-site, but also this connectivity can help us to detect already remotely if something is going wrong on that side also. We have also invested more and more into this air quality because we believe that our solutions are really providing us for the best solution on air quality or the highest filtration. Our compressive technology, and we want to be able to prove to our customers that we can provide that solution in the best way also. And then, okay, I want to mention, I think I also -- I think we are already doing that for several years. Of course, the new technology and the fact that AI is now much more accessible and that you have as for computing power that allow you to do more, I think, help. But again, our approach from machine design to overdo the sales, but also this energy monitoring really, combined with AI really enable and unlock new possibilities. And also this in the presentation this afternoon, we will try to explain us how we can really help our customers with these solutions. Then all these new building blocks and the solution will develop, I believe I think they can contribute a lot into this new low carbon economy. And I want to really state a bit of how it could work. So here, you have a typical utility room. And I think what we try to put first is what we believe are this best compressor, Atlas Copco Compressors. And what you can see, they are all different already. So again, depending on the moment of the year, depending, you are in the full shift, or in the weekend or you are -- different solution will help the utility room to be the most efficient. And that's the reason why we believe Atlas Copco be able to provide this best solution in different technology is already a very good base to ever low energy consumption. We put here on the bottom here, what we call our central controller. It's a small box into utility room, but there is a lot and lot of software development ongoing there to connect all the machines together and to really optimize. So this optimization can be done based on models in the optimizer and that will be on site, but it's also remotely connected and we can ask for the interact and over time, improve even further this connectivity. Then behind the compressors, we have the different air treatment solution and you recognize a bit the machine we just saw in the innovation part. This -- when we can put the best equipment solution, you can also do it nearly with using 0 energy and that is why the testing is very important. Then in the bottom, we have what we call our energy recovery box. And there, we capture all the heat coming from the compressor, and we've provided in a positive way to our customer. And why is it so important? Because a lot of customers in the utility whom also are generating heat, sometimes hot water, but also some steam. And using in a positive way, the heat of the compressor can really help. I think we have also -- based on our models and our solution, we can really provide this heat in a stable way. But we have also offered now recently also some heat pump solution on high temperature. So to complement the [indiscernible] solution together to provide in a stable way, what we call green heat to our customer. And I think answer that is I come back to a bit when you visit customer, the one of the most efficient compressor utility room, but they want also to have a very nice and low-carbon demanding solution for the heat. And so that I think we can provide. On the top of the utility room, you see also this cooling solution. And also, I think it's very important that you can -- if you want to provide heat to our customer in an efficient way, you don't want to use everything in a negative way to the cooling part of that utility room. And also there, we are providing our customer now with the best solution. Now going a bit more to a specific the application and domain. We have Atlas Copco already over a long, we are providing to our customer a good solution into the CNG market, the compressed natural gas. We are growing now more and more to the biogas. For the biogas, I think it starts from very low pressure. So when you have the digestive, you will need some very low pressure machine to take the gas out of the digester and then to bring to a purification system. So that will be step number one. And we have as Atlas Copco, the right solution for that. Then when the [indiscernible] is removed, you will have solution for cool compressors, where we will then increase the pressure from this 1 bar to 7, 8 bar. And that we will do with our cool compressor. And also there, we have now nice solution available on the market. And that pressure allow you to remove as to the CO2 into the biogas because when you produce biogas, we have first to remove the sulfur and then later on, you need to remove the CO2. And the CO2 we have also based on our absorption solution, good solution to remove. But as for them to capture the CO2 and to compress and to eventually store or to use into the application in a positive way. There is a lot of demand today in the market for a good production of CO2. You don't want to burn gas anymore to produce CO2. You want to recuperate from residual application and also biogas is a good source for doing that. And in many ways, eventually, you want to use the gas for the mobility. We can also provide this [indiscernible] that you need there and I think also this solution we have. So I think we have a full scope of solution. I didn't touch [indiscernible] filtration as in the picture. So we have really a full scope of solution to help our customers into the biogas industry. Then another example is on CO2 compression. And I think we have, of course, everyone want to go to green electricity. But today, there is still a lot of work to be done before we will be there. And so I think there is also a lot of demand to not let CO2 be released to the external world. And I think we have -- there is a nice solution to very smaller customers, for instance, into the beverage industry, they need also CO2. They need also some compressors to doing that, so we can provide that. But you can also then store the CO2, and also there or get a big gas and process machine provides the right solution to do a CO2 storage both on site and also underground under the water. And also sometimes to help also to collect all going for the nitrogen pushing into the ground now to CO2. And so there, we have the right solution, and we keep developing on that. So we really believe that we have a lot of new potential and application. I think I explained the CO2 a bit. I explained the biomethane. I think you know that we're also doing, I think, very good into the LNG for ships. It's also important, but not the only one. And then this afternoon, we will explain you our journey on hydrogen. I think as today, we have a lot of new solution and development on going to make, I think, a full contribution into the hydrogen world. So with this, I want to summarize in a simple way. I think we have an increased potential in existing markets, you can make -- we can make the installation more efficient, but we can also add a lot of new complement and adjacent solution to make the full utility room the most efficient. We want to build on all this technology to do that. But also to be part of this new emerging market. I mentioned the battery industry, the solar panel, electronics, I think growing very fast. So we want to be there, but also to be part of the hydrogen, the CO2 world and the new gases that needs also a very efficient compressive solution. And we believe that doing this, we can really contribute as compressor technique into a low carbon society. So I think it's a good foundation for the future. Thank you.

Please stay on stage because now it's time for the questions and answer session. [Operator Instructions]. I see we have already a lot of hands up here. So I'll start with Daniela from Goldman Sachs. There will be a microphone.

So 1 question from my side. Vagner, when you talked about the 4,000 business lines, they had P&L and balance sheet, can you give us a little bit of an overview of how capital allocation goes from sort of what do you dictate from the top in terms of which business areas benefit versus what is suggested bottoms up to get an overview on that?

I don't think we have defined figures per business area. They all have a different strategy, and they have different -- they are in different development stages. I mean if you look to Compressor technique, it's a very good return on capital employed. We did have some big acquisitions in the past that became a business area that was out of Compressor Technique, we had Vacuum Technique. We also had Power Technique and a good discipline. And other business areas are in a different journey, building the product portfolio. So we don't -- we try not to limit what -- how they can invest. If they show -- you don't have a good, let's say, return, you cannot invest. I think the focus is which markets do we want to be in? Which technologies do we need for that? Should we go organic, should we go inorganic? And I think -- and that is more the decision. And then we look into the future, what is going to be the return in the future. We want to, again, be in very attractive markets. I don't know, Peter, if you want to comment with a bit more details on that one.

I want add maybe something to that, that we are of course, in the very fortunate position that we have a very solid cash flow generation. And as a result of that, we can say that we don't have any methodology to have competing structures for capital allocation. So we are not comparing one investment in one business area to the other and say, well, we have this amount of money, we're going to give it to you or to you. And that is, of course, thanks to the fantastic cash flow generation that we have. And that's also why it is so important for us to continue to drive that cash flow generation so that we actually do not end up in the uncomfortable position that we will need to prioritize between the different initiatives we have. But of course, each and every initiative from each and every division that is being brought forward to the business area management at first and then to the Executive Committee ultimately to the Board, depending on the amount of investment or capital allocation we need to make is, of course, scrutinized on its merit based on net present value calculations, return requirements, et cetera. And of course, also from a strategic perspective, how well it fits into our strategic map. If it is not close to home, if it is a bit far out, if it is rental, but not really specialty, et cetera, then, of course, it already kind of gets disqualified. And then, it's about what kind of return, how are the synergies is the value that we can create really going to drive the value for the group as well. But it's not a debate about whether we're going to spend the money on A or B and that they need to compete between the divisions or the B, As to get the cash that is required.

Next question, Gustaf.

Gustaf Schwerin, Handelsbanken. I have a question to Philippe on the service slide that you showed for Compressor Technique and the benefits coming from that. Where would you say that you are on that journey today? I mean to what extent are your customers doing more than say, spare parts out of service? And maybe if you can say something about the potential over time, if you want to express that as, I don't know, percentage of revenues coming from service penetration on installed base or whatever really?

So yes, just to repeat for everyone. So the question was about the service letter. I guess it's for you, Philippe and the penetration rate and the development we have seen.

So I think as [indiscernible] in the presentation, we are investing a lot into making this service, I think [indiscernible] really improving upwards. And I think we see really the step coming up. So I think there is a good progress historically. And I think we see now also this new optimization service plan really coming in and I think more and more companies are joining us on that. So, I think the trend is really working. And I really believe that in the future, we will be able to benefit even more from that. I think I explained that we can prove us more and more to our customers that the journey works and that's our thing of approach. We say okay, we will commit to result, and I think we can deliver this result, and that makes that the circle is really a positive one. So I think the journey is really working.

Thank you. We have Klas from Citi.

So just to reflect back longer to 2017, when you became the head of CT. And before that, we had a period of quite low growth in CT and partly also because of Asia and China and the low growth there. But one thing that you can [indiscernible] there was to increase R&D quite significantly and investing product, and we saw the growth really, really taking off. There was [indiscernible] ordering maybe as well. But nevertheless, a big step-up in innovation. When you look at the group today, and you're now at around 4%, do you see sort of a need to increase further? And in what areas when you look at R&D, would that be?

I think the focus is the same. I think what we saw, if I talk -- I think it's better talk about Compressor Technique, sorry Philippe, but if you want to add it later. But I think it's what we did, we did saw the need to increase the R&D spending. We saw competitors getting closer and then, okay, we need to come. But also, we saw that in some core technologies, we could put some smart people together and say, "but why". You believe you have reached the limit. It was also a mindset change as well. And I think that gave us now. I think we are harvesting, we can say some initiatives from the past that we could stretch the boundaries of technologies and going to new gases was a bit of risk as well. And in a way, we tried as well to work on the mindset. We could take more risks in some development. And I think that was important. It's not only to increase the spend. But what was also a conscious decision on where we should spend? Which market? Which markets we offer growth? Which applications we offer growth? And then we invest it. And we had also cases where we said, okay, we are not sure about this market. should we invest now or not? Or should we wait a bit to see if the market -- together with the Board, and that went all the way up to the Board and the Board also support because we said, okay, we can wait, but I think we see that there will be a market in some applications. And we took, let's say, not a huge risk, but a calculated risk to invest in R&D without knowing how the market could be growing development. And I think I'm quite happy with the outcome of that. I think the mindset was also important. I should not underestimate that eagerness to step into new applications. For instance, in some initiatives that we have, if we feel that we have to increase, we will increase. I think Peter said, well, we don't establish targets on that. Of course, everything you do has to be financed by the gross margin we make. And it's a self-feeling as well because if you invest in new technology, you create customer value, you have the right gross margin, then you can reinvest the money back. I think that goes hand on hand, have to be in profitable applications that you allow to continue to invest. I think that combination, I think, has to be in place.

Next question goes to Olof at Danske, please.

One question for Philippe. I think it would be interesting if you could elaborate a bit on the potential for heat recovery? And what's the penetration rates at existing customers today? How much more revenues does such solution generates instead of just selling a compressor? And what's the pullback period for customers installing such solutions?

Okay. No, no. I think it's a very interesting question. And I think we are working a lot on the different dimension. Maybe starting from the penetration. I think today, it's still relatively low. And why is it so? Because often in the past, simplicity of the installation was the focus and doing this energy recovery creates a bit more complexity. So there is definitely a lot of potential. So there is, I think, the majority of installation today doesn't use the energy recovery. As I said, there are several reasons for that. I think burning gas was very simple in the past. So you put it on and it goes. So when you do it from energy recovery, you need with intelligence beyond the system because you need to heat when the process needed. So I think the fact that we can do more and more digital predictivity that really is enabled us to make this energy recovery now today an accessible solution to our customer. And then I think, okay, the compressor is not always running the full load. That's the reason why we believe that complementary that solution by high temperature heat pump is, I think, a good formula because then we can also guarantee or with the heat to be delivered in a stable way. So that's a bit of our approach. And now we want to make sure that our customers can really unlock that potential. So I think still a lot to do and now I think, really working very close to customers to make it, I think, a solution that they can really integrate into their process.

Next question is from the web, is [ risk minded ], and it's for you I assume, Andrew. So can you talk about the opportunity in industrial flow, addressable markets, type of technology you're after? What other pump technologies are you missing in the portfolio?

Yes. That's an interesting question. I mean as I mentioned in my presentation, we're particularly focused on positive displacement pumps. We think that's the most interesting segment. Of course, the pump segment -- or the pump market in total is huge as some $80 billion. And so you have to double down in a particular space because it's so enormous. And the positive displacement space alone is EUR 20 billion. But we are only going for a small segment of that also. So we don't have all the technologies to compete in all of the positive displacement space. So in terms of technologies, we have the 4 or 5 technologies we have today. We want to add a couple more and increase the addressable market. And of course, as of today, we're a small part of that market and it's so big that there's plenty of opportunities still to go for.

We have over there.

Matthias Holmberg from DNB. I think this question is mostly for Peter. I would be interested to hear some about the status of the capacity investments that you're making in Vacuum Technique. And also if you could reflect a bit upon how you view ramp up here in relation to the anticipated demand recovery in semis CapEx? Is it sort of important that the ramp-up matches demand? Or would you be fine with building some excess capacity that sits idle until demand recovers.

Okay. First, maybe on the status of the investment. I think they are a little bit in different stages. But most importantly is that we have increased the capacity across the globe in the power hubs, as we sometimes call them, basically Asia including China, but also, of course, South Korea. North America has been a very big focus and also a bit in Europe. But when it comes to the investments, we are in good progress. We have been balancing a little bit the timing of the execution of the investments in the sense that the moment that we felt that the semiconductor industry was not proceeding as fast as they initially kind of indicated. We also kind of paced the execution of the investments a little bit. But today, we feel that we are basically ready for an upturn in demand, and we added a lot of capacity there. It's hard to establish exactly how much capacity will be needed, but the idea is that we would get back to some -- a little bit of headroom in that capacity because in the past, we used to have that headroom. As you might know, the demand pattern can be quite bulky. So it is not a factor that you can run at 95% efficiency all the time, based on the fact that they improve the yields in those new fabs. All of a sudden, when the yield is there, they will place fairly big orders and then the delivery times tend to be relatively short. So you need to have that headroom to be able to deliver on those big chunky orders. And I believe that from a capacity point of view and of course, the proof of the pudding will be in the eating as always, but we do believe that we are well prepared for an upturn. On the timing of that upturn, well, that's the million-dollar question or probably even much more than a million-dollar question. And I have to be fair and honest about it, I don't know. That's my answer to that question. When we listen to the market, there are some indications of positiveness. One is that we do believe that from our demand perspective, we believe we are at the bottom today, and we do not see a significant decrease in the coming quarters. So we do not expect that maybe minus, but it could also be kind of stable at this level. That's one thing. We believe that, for example, inventories for chips have been reduced a bit, which was a problem 1.5 years ago or so that there was far too much stock. So there are some positive signals from the industry as well that things are probably approaching more, let's say, a turning point. But the timing of that turning point is difficult. Optimist would say, second half of 2024 looks probably better. And then maybe the more pessimistic voices are 2024 is going to be a transition year. Don't hold your breath right now, wait until '25, then things will get better. And of course, my controlling nature tells me to be a bit more conservative. So I tend to vote a little bit more for the conservative approach, and then I'm happy to over deliver and under promise a little bit. Should it come earlier, but that's at least how I see it and how I read the signals and the comments from my colleagues on Vacuum technique.

Thank you, Peter. We have a question at the very back.

Johan Sjöberg, Kepler Cheuvreux. I have a question on the sustainability impact on the compressor technique market. What sort of upside you see to the potential compressor market, assuming all these new techniques coming on play. I think at the last CND Mats Rahmström said that or indicated roughly that the compressor market could double. Is that still your view, of course, in the long run?

I think Matt's quoted Vagner. So I think Vagner need to respond.

That's fair. But of course, when it will happen, I think that is -- and if all the stars are aligned as well. But we are working in all these new applications if that comes through, it will be a significant size. But it will take time because you see there are a lot of technologies to be developed. The -- in one of the previous questions, you said about payback something that is a challenge today because you have to put all these new technologies together in a cost-efficient way and still a lot of design to be done. But that's the path that I think the world is going. And our customers is going in that journey. I think the most important is what Philippe said, when we go to customers, they are asking for that. they need support. And that's why we are putting now a group of very smart people to come up with those solutions because there is a need already today, some customers, they have targets they need to reach their commitments when it comes to scope 2 and they need help. And we see already there a good starting point, especially on the leading companies that really want to be carbon neutral. They are really coming with initiatives. I think that's what we -- why we are stepping to this new technology. To say exactly when those you have the CAGR of the air compressor that will continue to grow, driven by replacement cycle. If we can develop a more efficient compressor that could offer a payback as well. So then you decrease a bit the replacement cycle. It's one trend that is already within that figure and all the new technologies which just cannot be precise when that will happen.

We have a question from Nordea.

Magnus here from Nordea. A question for Andrew. Could you expand a little bit on the nature of your M&A pipeline size number of opportunities in there. And if there's any way to -- you can help us with the total size in context of the business area side, that would be very helpful.

Yes. I mean, obviously, as I alluded to, we're quite active on the M&A and we have quite an active funnel. And we're always looking. We have been looking for the last couple of years, and we perhaps have only been successful, really successful on the pump side. If we talk about the pump side in the last 3 years. I can assure you we have been looking and we have been studying for the last 10 years. And sometimes, you get lucky and you see a company that you are very interested in they also want to sell and sometimes you're unlucky and you have to wait a bit longer. I mean, the size of that is variable. It changes from time. I would say, for sure, our biggest focus is probably industrial pumps, although we're looking both at the dealer network and the other side. And also, we're looking in the portable flow space as well in the submersible pump space, let's say. And we have a couple of guys continuously working on our pipeline. And we have actually a very big funnel. The interesting thing is that we are a little bit bigger reputation now on flow than we had in the past. So we have some people coming to us as well, which never happened before. And then it also increases our funnel. But it's always that balance between do we agree it's an interesting target and does it make sense within our strategy and sometimes you take a look at the company and it looks great from the outside. But in fact, when you get on the inside, it's not what you expected there. So it's a combination of all those things. And it's a continuous process and I thinks it's a numbers game. The bigger the funnel, the more opportunities you have to close them. And if your funnel is very narrow, then you have less opportunity. So it's really difficult to predict. The only thing I can tell you is that we are very active, and we want to do more.

Thank you, Andrew. We have another questions from the web, and it goes to you, Philippe. And I'll try to read here. Is the connected compressors -- compressor system, one in which you can operate in close digital infrastructure or is it integrated to the other software and digital tools that are present on the factory floor. That was one, and then they follow with. And finally, can you give us some numbers on the benefits such as energy savings, higher output, et cetera, that comes from those connected compressors. The first 1 was is -- are they connected to the other systems and the other ones, the benefits.

Yes. I think I touched it briefly during the presentation. We have learned that if we have not this 4G, 5G connection, it's very difficult to make it stable and to keep the transparency to our back end and to go back to the customer with data that are really manageable. It's difficult to do. So that's one solution. But we are so we -- we are also very close to our customers. And when they need to connect to the SCADA system, the same can be done. So one is not against the other. We really provide both solutions.

And the second part, you asked about I'm not sure we shared the numbers, but can you give us some numbers on the benefits such as energy savings, higher output that comes from the adoption of connected compressors.

Yes. During the visit this afternoon, we will a bit, it really depends on the type of compressor, the size, the application. So it's very difficult to give you 1 number, but it's really significant. It's -- yes.

If I can just add one [indiscernible] on that one. I think the good thing, what we see now, it's really part of our day-to-day life in the customer center. Using -- the data is already integrated in the teams we do. And I think that is -- and it's spreading as well into engineering in other areas of the company. I think that is really creating value.

In the back.

Andrew Wilson from JPMorgan. I wanted to ask you a question in terms of -- it feels like in compressor, it's -- sorry, can you hear me okay? So you are looking like you couldn't -- in compression, it feels like the business model is kind of moving on in the sense of kind of product plus service to more solution plus service. And does that portfolio broadens in terms of equipment? And also, as kind of that investment in digital goes into service, it would feel to me that it's going to be increasingly difficult for the competition to replicate that maybe outside of some of the bigger players. And I think you can probably make the same argument in terms of industrial technique and I suspect the others to some degree as well. I'm just interested in what you're seeing in terms of your competitor behaviors with regards to trying to either match that or trying to do something different because it would feel it gets increasingly difficult for them to do that.

I think what I tried to present you that we don't develop only one separate box. We tried really to develop that total solution. And that's we believe -- we do that because we believe that's really the number that matters for the customer that this full utility room is performing in the most efficient way. And we believe approaching that, we really create the best value for our customer. And as I try to explain, we start for more compression, but over the years, we have built all these other technology, and we build it from the ground. So we develop and we produce them also ourselves. So we can put the right data model behind it, and we can make this connectivity really smart. It's not only data, but it's also the physical models behind that. And I think that creates, I think, a very strong solution for our customers. And I think that's really our approach and how we believe and we want to build further into the market.

Good. We have one question here. Ben, please?

It's Ben from Bank of America. We've talked a lot about the opportunities in the parts of the portfolio that you're super excited about. Are there parts of portfolio that are not performing as you'd expected and could potentially be disposed? Could you maybe talk a little bit about that?

I think that's a general question for you Vagner.

I think we are always revising the portfolio I think in some products, it's already under transformation. It's not something that we will -- now this is not part because the transformation is ongoing already in some product portfolios where we can find a bit more growth. I'd say, at this point in time, we never say no. we are not looking to, but the revision of the portfolio is a constant practice or repurposing or refocusing the portfolio, I think it's something. We have a couple of exercises of growing in CT, but repurposing the portfolio as looking for new niche markets where we can have a better growth. So repositioning. I think that is ongoing on a constant base.

Klas.

Thank you for taking the follow-up. So also on service, but asking in a different way. Obviously, we've seen high single-digit growth, particularly in Compressor Technique for many, many years. And I mean, that's very impressive. I mean you see that in sort of regulated industries like elevators and so forth. And I'm trying to understand a little bit, when we move from air compression to sort of industrial gases, et cetera, is that increasing the wear and tear? Is that increasing the addressable market on service. That's number one. Number two is really around the increased complexity of the compressors. So you talk about heat recovery, et cetera, and adding connectivity to that, does that also mean that it's easier for you upsell a service contract.

I can maybe start and you can complement. But I think what I tried also to explain, we really believe the foundation we put in air compressor, we want to use in the same way into the new application. So we don't want to just go into a gas market, and we think the me-too product we want to provide -- the same kind of total solution into this world. And as of what I'm trying to also present, we don't go with just a compressor. We also develop filter for hydrogen. We have already drive. So we believe putting the full scope is also helping to create the difference to not be a me-too into this new world. but to provide the same solution. Because if we can do that way, we are -- the aim is to do the same, replicate the model service model for this application in the same way that we did for the air application. And I think the connectivity is [ in the ] hydrogen, of a CO2, of air compressor is the same data that you collect the same way of working, so we can very easily replicate it. And I think then we can leverage and make sure that we are there also, I think, providing, I think, the best solution and create a bit what you say that we can also if on this new application, the same service penetration that we have into the air compressor.

I can add -- just can add a couple of things that we have done as well lately. So we have already adopted the platform, the SmartLink platform because we talk about SmartLink as a -- you also have -- you need to send data. And then you need to host that data in a certain way. And a couple of years ago, we decided to revamp the platform to receive the data from different types of equipment already trying to fulfill that mission. And some of the products that you said will have higher aftermarket, some will have lower. On average, it's going to be similar after market potential.

Anders [indiscernible] from ABG, please.

We just appreciate an update on compressor technique in China? I know last year, Mats talk very much about continuing to invest, et cetera. Just be interested, are you sort of fully localized, are you sort of confident that you would be insulin to any or insular to any further trade restrictions, et cetera. So are you still spending a proportionate amount of CapEx there? And if also for Vagner, if you just say a few words on the same topic for vacuum that would we appreciated.

Okay. I will start for compressors. I think we've built a full development team also in China, and I think maybe 10 years ago, it was most localization and today, we have the full range of products really localized. So we have 95 plus products that are available in China for the Chinese market. So that we have. And we have now put also the same development team that you will see this afternoon here in Europe. We have the same approach in China. And we developed also now -- also in China products really specifically for the Chinese market. And why we believe it's important because we want to be competitive into the biggest market in the world. China is the biggest compressor market in the world. And we want really to be, I think, a big player also in China, and we are big and we want to maintain. And that's the reason why we believe it's not only localizing, we really need to develop. So I think there is a full team also to develop the market in China. And then maybe to pick up on the previous question, I think we see -- as for that China, there is a little bit of headwind now, and there is also a big focus now in China to go to this replacement. So the journey that maybe in Europe was 10 years ago on replacement. That also now is picking up in North America. So a lot of people are consensus that you need to improve your installation and they take that journey with us. And also now in China, I think both from the government, but also from the customer, the fact that electricity is foreseen to become more expensive in the coming years. And so make that journey on replacement is ongoing. So we believe we are well prepared for that.

So when it comes to vacuum, we produce most of the products that we use there, but there are products that we are still not producing in China. And we are addressing now as we speak as well that we want to have more local production. One good example, we were not producing abatement systems in China. Now we started the production. There are some other products in the pipeline as well. And not only that, in IT [indiscernible], there are initiatives as well. We are expanding our operations there. So we are working on that as we speak.

Magnus here from Nordea. Another question to Andrew. Could you talk a little bit about how large proportion of your portfolio that you have electric or battery or hybrid offering and what the profitability is there and idea a little bit on what that has done to your competitive position?

Sure. So on the portable compressor side, we have the full portfolio in electric. So we don't have the same quantity of units, but we cover the full range compared to the diesel. Today, it's still a small proportion of our sales, but I can say that it's more profitable than the diesel business because there's less competition in one respect and also our product costs are less. So in the future. We, of course, are more interested in selling more electrical equipment -- electrical-driven equipment because it's more rewarding for us. And indeed, the total cost of ownership for the customer is also better. So when you have less service costs and better total cost of ownership, the customer is prepared to pay for that benefit. And so that's on the portable compressor side. I also mentioned on the portable flow side. We have a full range of electric pumps as well a complete range. So for every diesel-driven surface pump, we have an electrical-driven surface pump with the same, let's say, dynamics, better margins, better total cost of ownership. But of course, in a lot of these installations, which are quite remote, they're very interested in having a unit that runs on diesel because if you're in the Australian outback, for instance, you may not have a power supply. So our goal is to sell more, and we're still starting that journey. So I would expect, at some point, we get an even more positive mix.

Any more questions here we have? Please.

It's Rory Smith from UBS. It's quite a specific one for compressor technique. Are you seeing any activity in North American upstream oil and gas from the adoption of air compression to prevent methane emissions from upstream production sides, apologies, that's quite niche, but anything there?

Yes. I think on the gas industry, we are not in only one of the niche, we try to be in the full upstream and downstream. So the gas price is relatively low. So I think the last month. So that makes -- it's a bit lower also very recently, but we believe the trend is good and we have the right solution. So that's the best way we approach it.

Good. Daniela, you have one more question here, please?

A question for Peter. Actually, on the chart where you had the dividends and the cash to shareholders. It seems like you've done redemptions every 3 to 4 years. Can you remind us about sort of the logic of the process behind it?

I mean it's not a mathematical formula that every 3 years, there's going to be another dent in -- or a positive dent in the graph. It's of course, a function of the specific situation. I think from our perspective, and I could -- I would imagine from a shareholder perspective in general as well, our first preference is to take the money and not run but use it for good investments in acquisitions because if we define good target cases and we can see how the value can be created through the acquisition, then we would rather deploy all that cash into acquisitions and try to generate even more value than we already are. And that, I think, is the first preferred option to use the cash. But then if at a certain point, we feel that the cash is accumulating, thanks to a solid cash flow coming out of the operations. We might, at a certain point in time, if there is a kind of excess cash position, again, entertain the idea of an redemption, but there is no specific timing on that. And like I said, there's definitely no formula like, guys, it's year 3, let's do redemption again. So that's not how it works. But again, if we find the right targets, mostly medium-sized targets and very small targets have been on the agenda so far. We haven't done really huge acquisitions. That doesn't mean we shy away of them, but of course, there is -- it's much more complex, much more risk associated with it. And also in that case, if it's a bigger company, it's less likely that there will be a perfect fit. There is always something that doesn't really match what we want to do and then it becomes fairly complicated maybe. But if there is an opportunity, I think we have the firepower, not only from a cash position, but actually also from a funding point of view, I think we have a fairly high rating, but the rating is not really what drives us. So if we find a good target to add to the group, we will definitely that if the Board agrees to that as well.

Good. I think we have 1 question in the very, very back, and I think it is Fredrik Agardh from SEB.

Yes. That's right. I have a specific question on your semi exposures. So I guess it's for Peter or Vagner. In the past years, you've been very successful in China. And if I'm correct, you've taken quite significant market shares in your deliveries there. Could you give us an update on how much semi exposure in the past year or so that is actually China. And what -- where do you expect that to go in the next year or the next couple of years here? I understand the balance in the U.S. and perhaps in Europe in demand. But where do you think China is going here.

Maybe I can start and you complement. I think the demand -- if you look to China, so they still import quite a lot of chips. So I think I will not drop a figure because I think that's public data. And it's -- and they are also eager to develop. So in the higher nodes, I think the [ reviews ] work, and that's the signal that we -- it's clear in the mud, they will work to have their own production and they still import a lot. That means there will be still growth in China in the coming years for the semi. So for the lower nodes, I think it's a technology problem. I think that we -- it's a speculation if I comment, they will definitely try to develop. But I think already on the higher nodes that is used in several industries, and they still import quite a lot that development will continue, meaning they import a lot of chips and they want to have that locally produced. I think the journey will continue from what we can see.

Yes. And I think to add to that, I think -- and that is actually, you could say, valid for every single business area when it comes to China in order to be able to continue to grow our share of wallet in the country. It's crucial for a multinational, let's say, foreign company to continue to have leading-edge technology and as long as we have leading edge technology, having the total life cycle cost at the lowest level, delivering the best efficiency to the process, et cetera, and of course, also provide the right service capabilities to the customer so that the uptime can be at the highest possible level. I think we, of course, are in a good position to continue to do a good job in the market. And that is, of course, by no means limited to vacuum technique, but especially on Vacuum Technique, which has been defined as one of those strategic segments from, let's say, national strategy point of view. I think it's important we continue to have leading-edge technology. As Vagner said, the big nodes, they will -- they are focusing a lot, and I think many of the investments are coming from exactly that particular segment. That is where we sell most of the equipment while at the same time, of course, they are fighting hard, I think, to develop the lower nodes or the smaller node technology very, very fast. And I'm sure with all the efforts they're putting into that, they will be successful so. But then again, our local-for-local strategy fits very well for all the different markets in the world, but particularly for the Chinese market. And basically, our strategy for China is across the group to engage and derisk. And local for local is one of the most important aspects to derisk our business in China, but also to engage with the local customers, with our own employees in order to make sure that we still continue to attract the best potential and the smartest people to continue to develop in the right direction.

Is there any chance of getting a number on how big China is of your semi exposure at the moment, just to get a feel for it, a rough ballpark.

I don't think we have disclosed that.

No. But it's, of course, one of our most important markets, but we [ cannot ] share the number.

But you know that, of course, that if you look at the spread of the different business areas as being presented on Capital Markets Day, et cetera, that Asia overall is a most significant part in the portfolio for Vacuum Technique. And okay, by extension, you could, of course, clearly say that China is a very important market within Vacuum Technique.

Good. We have 1 more question from the web, and then we have time for 1 final question from the audience here, and you are very quick Sebastian, but we start with the web. It's from Rizk. It goes to you, Vagner. Initial impressions as the CEO of the group, what initiatives you want to implement at the group level from CT, anything different we should expect on running the group.

I think what I said, and I stick to that during the presentation, we do have a good strategy. I think the focus that we have, those pillars that we work to focus on niche markets, try to find growth differentiated technology. I think we will continue to focus on that. But I also highlighted the importance of people in the whole process. And by no means, I say we were not doing well, I think we were doing very well. The work -- the way I've been working my entire career is through people development and engaging people as well, empowering people to try new things. I think that has worked quite well in CT. And I think we will continue. That's the way I work. That's the way I think that we have been quite successful in CT, but not only. I think I was in the Service division. I was in other areas and I think this is a good way to get the people together and to find solutions to the problems that we have. We have been successful with that. I will put emphasis on the people side definitely.

Sounds great. Last one, Mr. Sebastian.

Just a follow-up on the question on China exposure in VT. I was wondering, do you have any products that are actively blocked from exports into China at the moment and like cryo pumps or turbomolecular pumps. And are you currently still allowed to service all your equipment in China.

I can start. I think, first of all, there are regulations in place, and we do follow all regulations there are restrictions, and we do follow those restrictions. What is -- key is what Peter said. We also have local development in China to support those markets, but I think the main topic, if there are restrictions in place, we will follow. And I think that is the main message and we will continue to follow. If they increase it, the restriction increase, we will comply, always. I don't know, Peter, if you want to add.

To my knowledge, at this particular point in time, there are very, very limited restrictions, limited limitations to what we can do in China. And then, of course, when we look at the particular products, the majority -- the biggest part of our business is more in the subfab. And there we have no limitations to we can do with the customer. So if any, then it's very limited. Sometimes, it can be indirect. If machine tool builders are not allowed, you're not getting an export license for their equipment and some of our products, even though not limited are going to be built into those machine tools, then of course, we also get an indirect, you could say, repercussion, but also so far that has been very, very limited.

Good. With that, we end this questions-and-answer sessions. So for those of you on the web, thank you all. We will leave you now.